New Delhi: The Delhi High Court has said
that eatables provided by the Indian Railways Catering &
Tourism Corporation (IRCTC) in trains do not come within the
ambit of service tax.
The court passed the order on a petition of the IRCTC,
seeking a direction from the government to impose service tax
on food and beverages served by the Railways, instead of Value
Added Tax (VAT).
Rejecting IRCTC`s plea, a division bench comprising
Justices V K Jain and Badar Durrez Ahmed said that service tax
cannot be imposed on eatables and beverages served in
"We hold that the transaction between the petitioner firm
(IRCTC) and Indian Railways for providing food and beverages
to passengers aboard trains is a transaction of sale of goods
by IRCTC to Indian Railways," the court said.
"There is no element of service at all, except heating
cooked food and serving food and beverages. In fact, the
service component with respect to sale of food in a restaurant
is much more than supply of food to a passenger in a
compartment of a train," it added.
The IRCTC had contended that provision of eatables and
beverages to passengers amounts to services provided, and not
sale of these items.
IRCTC is a subsidiary of Indian Railways that handles
catering, tourism and online ticketing operations. IRCTC is in
charge of catering services on trains and railway stations