DEEPAK & CO. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE facts leading to filing of this appeal are, in brief, as under.

(2.) 1.1 The appellant specializes in supplying food to train passengers. Apart from this activity, they are also engaged in supplying of bed rolls to the passengers and cleaning of the coaches and toilets of the trains. The period of dispute in this case is from May 2007 to 31 -12 -2008. Prior to 1999 -2000, the Indian Railway itself used to give contracts to various persons like the appellant for supply of food on board the trains, supply of bed rolls etc. Subsequently Indian Railways Catering and Tourism Corporation Ltd. (IRCTC) was set up which is fully owned by the Ministry of Railways. W.e.f. September 1999, it is IRCTC which was responsible for organizing the catering and hospitality services on board the trains. They act as a licensing authority of Indian Railways to arrange for private entrepreneurs to undertake various onboard activities relating to the services to be provided on board the trains. The appellant were awarded licence by IRCTC to supply food and bed rolls to passengers in certain trains and also for cleaning of the coaches and toilets in those trains. For cleaning of coaches and toilets, the appellant receive an amount from IRCTC on per coach basis which varies according to the duration of the journey from the starting station to the terminus. For supplying bed rolls to non -ACs coaches, the appellant were charging a specified amount from the passengers, 12% of which was being paid to IRCTC as licence fee and the balance was being retained by them in respect of supply of bed rolls to passengers. In respect of AC coaches, the appellant were receiving a specified amount per bed roll from IRCTC. The Department was of the view that the appellant are providing the "support services of business or commerce" taxable under Section 65(zzzq) read with Section 65(104c) of the Finance Act, 1994 and accordingly they would be liable to pay service tax on the amount being received by them from IRCTC. It is on this basis that a show cause notice dated 1 -5 -2009 was issued to the appellant for demand of service tax amounting to Rs. 12,67,522/ - from them in respect of business support service alleged to have been provided to IRCTC during period from May 2007 to 31 -12 -2008 along with interest thereon under Section 75 of the Finance Act, 1994 and also for imposition of penalty on them under Sections 76, 77 and 78 ibid.

(3.) SHRI Sanjay Jain, the learned DR, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that the services provided by the appellant are business auxiliary service covered by clause (vi) of Section 65(19) inasmuch as they have provided the services to passengers on behalf of IRCTC for which they have received remuneration from IRCTC. He/therefore, pleaded that there is no infirmity in the impugned order.