By TIOL News Service

NEW DELHI, OCT 30, 2017: SCNs were issued to the appellants demanding service tax under the category of "Support Services for business or commerce" for providing comprehensive onboard services in some AC/non-AC trains consisting of catering services, supply of bed rolls like bed sheets, pillow covers, face towels, bath towels, blankets,paper bags, etc. supply of cleaning staff for cleaning of coaches and toilets of coaches, supply of persons for miscellaneous items, supply of supervisor for supervision of comprehensive onboard services.

The Adjudicating Authority confirmed the demand.

Interestingly, in appeal, the Commissioner(A) held that the demand is not sustainable under the category of "Support Services for business or commerce" but under the category of "Business Auxiliary Services". Nonetheless, the lower appellate authority confirmed the demand.

The appellant is before the CESTAT.

The CESTAT observed that on identical set of facts, and in the appellant's own case - 2015-TIOL-3069-CESTAT-DEL the Tribunal had observed as under:-

"6. The principle is well settled that a classification of taxable service which is not alleged in the show cause notice cannot be concluded to support levy of tax. The determination of classification of services provided by the appellant to IRCTC is not an academic exercise. The lower appellate authority was discharging an appellate jurisdiction. Due discharge of such jurisdiction warrants recording a finding as to classification only on the basis of what was alleged in the show cause notice."

Concluding that the Commissioner(A) had gone beyond the scope of show cause notice, the impugned order was set aside and the appeals were allowed with consequential relief.

(See 2017-TIOL-3816-CESTAT-DEL)