Service tax on bed rolls….. The activity of supplying bed rolls by contractors to Indian Railways for use by upper class passengers in trains is a taxable service says DGCEI and DGST.
DGCEI and DGST are of the view that Service tax is leviable on the activity of supplying bed rolls to upper class railway passengers. To highlight this activity and the consequent evasion of service tax by such contractors, DGST issued a modus operandi circular alerting the field formations about evasion of service tax by certain railway contractors who are engaged in the activity of providing bed rolls to the passengers travelling in upper classes in trains. It was explained by the DGST that this activity of supplying bed rolls to passengers travelling by Indian Railways amounts to provision of customer care services on behalf of the clients and would come under the purview of Business Auxiliary service. The field is alerted that the demands raised against such contractors have been confirmed and that appeals against these Orders are pending in CESTAT.
The moot point is which Adjudicating authority has the temerity to drop the demand notices issued to the assessees based on intelligence inputs from DGCEI. The Circular goes on to state that the assessees have appealed against the Orders and the same is pending in CESTAT.
The CESTAT has in one case ordered pre-deposit of Rs. 20 lakhs.
F.No.V/DGST/21 (06)/M.O./2007/2225 MUMBAI dated 05/05/2008