Passenger comfort services to Railways treated as taxable customer care service; Section 99 exemption held unavailable to contractor.

Supplying bed rolls to railway passengers was treated as a service rendered to the Railways for passenger comfort and, on that basis, as customer care service on behalf of the client within Business Auxiliary Service under the Finance Act, 1994, attracting service tax. For the period after 01.07.2012, the activity was also regarded as falling within the expanded definition of service under Section 65B(44). The exemption in Section 99 of the Finance Act, 2013 was held inapplicable because it applies only to taxable services provided by Indian Railways, not to services provided to the Railways by a contractor. The exemption was construed strictly, and the non-liability claim failed.

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Issues: Whether the activity of supplying bed rolls to railway passengers constituted customer care service on behalf of the Railways and fell within Business Auxiliary Service, and whether the exemption under Section 99 of the Finance Act, 2013 applied.

Analysis: The activity was treated as a service rendered to the Railways for passenger comfort and was held to answer the description of customer care service provided on behalf of the client within Section 65(19) of the Finance Act, 1994, attracting tax under Section 65(105)(zzzq). For the post-01.07.2012 period, the service was also held to fall within the expanded definition of service under Section 65B(44) of the Finance Act, 1994. The exemption in Section 99 of the Finance Act, 2013 was held inapplicable because it protects taxable services provided by Indian Railways and not services provided to the Railways. The exemption was construed strictly, and the claim for non-liability was rejected.

Conclusion: The service was taxable and the exemption did not apply; the assessee's challenge failed.

Ratio Decidendi: An exemption confined to taxable services provided by Indian Railways cannot be extended to a contractor supplying services to the Railways, and such passenger-oriented service may constitute customer care service under Business Auxiliary Service.

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