IRCTC, responsible for organizing the catering and hospitality services on board the train, has awarded contracts to contractors to undertake various onboard services including supply of bed rolls and cleaning of railway coaches/toilets. Under pre-negative list arena, service tax department has issued show cause notices to contractors for levy of service tax under ‘Business Support Services’.

Recently, in a similar case, CA Atul Kumar Gupta, founder ‘Do You Know Services’, has appeared before honourable CESTAT on behalf of contractor wherein honourable CESTAT held that:

“………………..supply of bed rolls as well as cleaning of coaches and toilets of trains are not covered within the meaning of support services of business or commerce. The services have been rendered by the appellant to the passengers on behalf of IRCTC / Indian railways. We are of the view that such services are more appropriately classifiable under business auxiliary services under the category of “Customer care services provided on behalf of the client under section 65(11) of the Finance Act 1994”………….”

Hence, service tax cannot be demanded on supply of bed rolls as well as cleaning of coaches and toilets of trains under Business Support Services. Copy of judgment attached for easy reference.