The assessee under an agreement dated 14-1-2005 entered into with the Western Railway was providing services of washing, dry cleaning and ironing on linen, blankets, etc. of AC coaches and retiring rooms at Jodhpur Railways Station. To execute the contract, the assessee was required to collect the articles from the Railways and after processing as required to return the same to the Railways with his own transport arrangements. The Adjudicating Authority held that the services provided by the assessee were covered under ‘customer care service’ specified under ‘business auxiliary service’.
It is apparent from the agreement dated 14-1-2005 that Railway Administration invited the tenders in respect of washing, dry cleaning and ironing on linen, blankets, etc. of AC coaches and retiring rooms at Jodhpur Railway Station against the security deposit of Rs. 3 lakhs in cash from the assessee. A specific price for each item is mentioned in the agreement. To execute the contract, the assessee was required to collect the articles from the Railways and after processing as required to return the same to the Railways with his own transport arrangements. The assessee has also to submit an indemnity bond to safeguard Railway’s interest for all losses, damages or shortage of the linen entrusted to it for the washing/cleaning purpose. There was even a provision of imposition of penalty in case of delay and default on the part of the assessee who otherwise has to comply with the terms of agreement on day-to-day basis following such procedure as mentioned in the agreement itself.
Bare perusal of the agreement makes it clear that what the assessee was doing was supplying the cleaned linen to the Railways, where after the job of that particular day for the assessee stands over. It is also apparently clear that the assessee was not required to come in contact with the passengers, which means no service he was rendering whether on behalf of the Railways to the passengers/the service recipients of Railways. The assessee was not even required to berth the washed/cleaned linen in each Railway coach. The activity of washing and cleaning is apparently on principle-to-principle basis. There is no single term and condition in the said agreement which may prove that the assessee was rendering the customer (passenger in instant case) care services. It was simply providing the dry-cleaning services absolutely on commercial terms to Railways.
In view of the aforesaid, the services have been provided by the assessee to the railways and not to the passengers on behalf of the Railways. Therefore, the appeal filed by the revenue deserved to be dismissed. Therefore services provided by assessee would not be covered under ‘customer care service’ specified under ‘business auxiliary service’.
Citation:  97 taxmann.com 7 (New Delhi – CESTAT)