PREMIER GARMENTS PROCESSING Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) IN the impugned order, the Commissioner has demanded service tax of over Rs. 73 lakhs along with education cess from the appellants for the period July'03 to September'06 and has also imposed on them penalties under various provisions of the Finance Act 1994.

(2.) AFTER examining the records and hearing both sides, we note that, during the above period, the appellants were engaged in the activity of providing bedrolls, on behalf of Southern Railways, to passengers traveling in AC 2 tier and 3 tier coaches of specified trains. They used to collect Rs. 20/ - per bedroll from the railways for the above service. In respect of first class passengers, they were permitted to collected Rs. 20/ -per bedroll directly from them. All these were in terms of agreements executed by the appellants with the railway administration. In adjudication of a show -cause notice, which invoked the extended period of limitation, learned Commissioner found that the appellants were rendering "Business Auxiliary Service" in the category of "customer care service provided on behalf of the client" under Section 65 (19) of the Finance Act, 1994 and, accordingly, held that they were liable to pay service tax on the amounts collected by them from the railway administration in respect of AC 2 tier and 3 tier passengers and directly from the first class passengers during the above period. The case of the appellants, put forward today by ld.consultant, is that they were only rendering a 'hire service' and not any 'business auxiliary service', to the railway passengers. It is argued by ld.consultant that the relevant agreements did not contain any mention of 'hire service' and further that the hire service of the above kind was not specified for levy of service tax at any point of time during the period of dispute or even thereafter. In this connection, ld.consultant has attempted analogy between the subject service and certain other services like outdoor catering service.

(3.) WE have heard ld. SDR also, who reiterates the findings of the Commissioner and submits that the appellants have not succeeded in taking their services out of the purview of 'customer care service provided on behalf of the client', one of the business auxiliary services specified under Section 65 (19).