Custom, Excise & Service Tax Tribunal
A S Sales Corporation vs Principal Commissioner, Cgst & Central ... on 23 March, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH, COURT NO. 4
SERVICE TAX APPEAL NO. 50701 OF 2020
[Arising out of Order-in-Original No.40/Pr.Commr./ST/BPL-IV/2019 dated 30.08.2019
passed by the Principal Commissioner CGST, Customs and Central Excise, Bhopal]
M/s. A S SALES CORPORATION Appellant
Neelam Kunj, Asfabad, Itarsi (M.P.)-461111
Vs.
PRINCIPAL COMMISSIONER, CGST &
Respondent
CENTRAL EXCISE, CUSTOMS-BHOPAL GST Bhawan, Arera Hills, Bhopal (M.P.)-462011 Appearance:
Present for the Appellant : Ms. J.Kainaat, Advocate Present for the Respondent: Shri S.K.Meena, Authorised Representative CORAM:
HON'BLE DR. RACHNA GUPTA, MEMBER ( JUDICIAL ) HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER ( TECHNICAL ) Date of Hearing/Decision:23/03/2026 Final Order No.50694/2026 DR. RACHNA GUPTA M/s. A.S. Sales Corporation, the appellant herein is engaged in business of sale of packaged food, cooked articles and beverages at Railway platforms as well as in trains. The appellant is also registered with service tax department under the category of outdoor catering service, Restaurant service, legal consultancy service and various other taxable services. The department got an intelligence that the appellant was not discharging the tax liability properly. Thus, an inquiry was 2 initiated and it was observed that the appellant had not paid service tax under reverse charge mechanism on the amount of licence fee paid by them to the Indian Railways for providing onboard mobile catering services in trains. The said activity is „Service‟ defined under section 65 (B)(44) Finance Act 1994. In light of the said observations and the various statements recorded during investigation, the appellant was served with a Show Cause Notice no. 92/2018 dated 25.04.2018 proposing the demand of service tax amounting to Rs.4,12,42,079/-, for the period from 2012-13 to 2016-17 , from the appellant along with the appropriate interest and the proportionate penalties under section 75, 76 and 78 of the Finance Act, 1994. The proposal was initially confirmed vide Order-in-Original no.40/2019 dated 30.08.2019 except that the penalty under section 76 of the Finance Act was not imposed. Being aggrieved of the said order the appellant is before this Tribunal.
2. We have heard Ms. J. Kainaat, learned counsel for the appellant and Shri S.K.Meena learned authorised representative of the Department.
3. Learned counsel for the appellant submitted that the license granted by the Indian Railways is only a permission given to the appellants to carry out catering business at the railway platforms. Such permission has wrongly been treated as provision of any service rendered by the appellants to the Railways. There, in fact, is no relationship of service provider and the service recipient between the Railways and the appellants. The activity does not qualify to be called as „Support Services‟. Once there is no service element, the question of 3 liability even under reverse charge mechanism, does not at all arise. Learned counsel further submitted that the issue has already been decided by this Tribunal in favour of such assesses, in case of M/s. Express Food Services vs. Commissioner of CGST & Central Excise, Bhopal reported as 2025 (5) TMI 66-CESTAT, Delhi. 3.1 It is also submitted that the demand is partly time barred. With these submissions, the order under challenged is prayed to be set aside and the appeal is prayed to be allowed.
4. Learned Departmental Representative has reiterated the findings arrived at by the Original adjudicating authority. However, the Departmental Representative has acknowledged the decision in M/s. Express Food Services (supra)
5. Having heard both the parties and perusing the entire record and the decision referred by the appellant, it is observed that the issue involved in the present appeal is:
whether appellant is liable to pay service tax under reverse charge mechanism on the amount of license fee paid to Indian Railways, in lieu of the permission to have food stalls on the Railway Platform.
6. It is observed that the identical issue has been decided, not only in Express Food Services, but prior also in the case of M/s. Ambuj Hotels and Real Estate Pvt. Ltd. Vs. Director General of GST Intelligence reported in 2023 (4) TMI 322-CESTAT Delhi. It was observed in that case that the demand of tax in the Show Cause Notice was on „Support Services‟, however, the consideration paid as license fee is not linked with alleged service. The license fee is based solely on the 4 assessed sales turnover. It cannot be said that the license fee is quid pro quo to any support offered by the Railways. The earlier decisions have also observed as follows:
"28. It clearly transpires that the license fee is based solely on the assessed sales turnover. It cannot be said that the license fee is quid pro quo for any support offered by the Railways. It also needs to be noted that license fee is paid as consideration for the service provided by the Railways to the appellant by way of grant of the authorization to provide catering service on the train. This would be clear from the bid document and the relevant portion is reproduced:
"1.3.12 In consideration of the award of the License to the Licensee, the Licensee shall be liable to pay License Fee to Railway which shall be more than minimum license fee determined by Railway apart from the Security Deposit. The licensee shall submit the bill for providing on-board catering services on 10 days basis and the 90% of the payment will be settled based on the provisional bills while the final bills along with train occupancy certificate issued for each trip by the Train Superintendent will be settled on monthly basis. Railway will make payment of such amounts after due verification. In addition, Railway will make mandatory deductions for tax at source or any other deductions in respect of catering services.
1.3.13 In consideration of the award of the License to the Licensee, the Licensee shall be liable to pay License Fee to Railway which shall be more than minimum license fee determined by Railway. The entire License Fee shall be payable in advance 2+2+1yearly basis. The License Fee for the first 2 years will be payable fifteen (15 days) prior to commencement of the License at the beginning of license and the license fee for the second 2 years shall be paid within fifteen (15 days) after completion of first two years of the contract subsequently the license fee for the 5th year shall be paid with n fifteen (15 days) after completion of the 4th year of the license. In case of renewal for another period of 5 years, the same procedure shall be followed for payment of license fee. The licensee shall submit the bill for providing on-board catering 5 services on monthly basis, along with train occupancy certificate issued for each trip by the Train Superintendent. Railway will make payment of such amounts after due verification. In addition, Railway will make mandatory deductions for tax at source or any other deductions in respect of catering services.
29. The limited question that arises for consideration is whether the activity identified in the show cause notice qualifies to be a taxable service for which the license fee is said to be the consideration. The demand of tax in the show cause notice is on support services. However, the consideration paid as license fee is not linked with such support. When the activity identified to be taxed in the show cause notice is found to be non-taxable, the demand proposed in the show cause notice cannot sustain as was held by the Madras High Court in R. Ramadas vs. Joint Commissioner of Central Excise, Puducherry - 2021 (44) G.S.T.L. 258 (Mad.)."
7. The fact of the present appeal are identical. No distinct fact has been brought to notice by the Department, nor observed. Hence, we do not find any reason to differ from the above mentioned findings.
8. In addition, it is also observed that the demand confirmed is for the period 2012-13 to 2016-17. The Show Cause notice proposing the said demand was issued on 25.04.2018. Since the activity of appellant was not taxable, the question of any intent to evade tax with the appellant does not at all arise. Hence, the department is held to have wrongly invoked the extended period of limitation. The entire demand for the period prior 25.10.2015 is held barred by time. The demand for 6 the normal period is held not sustainable, in view of the findings as above.
9. In light of above discussion, the impugned order is hereby, set aside. Consequent, thereto, the appeal is allowed.
(DR. RACHNA GUPTA) MEMBER ( JUDICIAL ) (HEMAMBIKA R. PRIYA) MEMBER ( TECHNICAL ) Archana