Washing of Dirty Linen is Business Auxiliary Service : CESTAT

In a Ruling passed on 8.5.2018 by CESTAT Bench of Member ( Technical) Padmanabhan and Member(Judicial) Ajay Sharma; it has been ruled that washing of dirty linen is subject to levy of  service tax under Business Auxiliary Service.

The appellant M/s Rishi Enterprises  was   awarded a contract No. CG 509T/Bedroll Washing/08/Vol II from North Western Railway, Jodhpur Division on 26.8.2008   under which Railways awarded a washing contract purely for mechanized washing, cleaning, drying and Ironing of bedroll items at Jodhpur Railway Station .

As per contract; “washing contractor” means a selected contractor for the purpose of washing, cleaning, drying, ironing and dressing the bed roll items and other items/linen/cloths as per shown in the schedule of this agreement consisting of different items of cloths, blankets etc. for use of passenger in train/station/Jodhpur Railway Station.

As per show cause notice; the  appellant charged an amount of Rs.2,98,41,839/-  from Railways towards Washing of Linen  during the period 2008-09 to 2011-12.

It was held by the Bench that contract is for Business Auxiliary Service and washing of linen it is a customer care service provided by the Appellant on behalf of Railways as ultimately the passengers used the linen in  AC coaches and the activity is covered under Business Auxiliary Service.

According to RS Sharma Lawyer for the appellant; an appeal before Supreme Court will be filed  on ground that the colour of contract cannot be changed from yellow to blue unless person reading it is colourblind  and a washing contract with railways cannot  be interpreted as contract for Business Auxiliary Service or customer care service on behalf of Railways when at the stage of washing of dirty linen; customer of Railway (passenger) is no where in picture and washing activity undertaken for Railways cannot be deemed to be customer care service provided by appellant on behalf of Railways to its passengers .

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