Railway catering services liable to pay sales tax: HC

The Bombay High Court has held that all railway stalls on platforms and catering services in trains are liable to pay sales tax and cannot be granted any exemptions.

A division bench of Justice SC Dharmadhikari and Justice Prakash Naik passed this order recently while rejecting a petition filed by the Union of India, through the Ministry of Railways, challenging the demand made by the state of Maharashtra seeking indirect taxes on the sale of goods by M/s Western Railway Canteen/Catering Service.

It was contented by the Ministry that departmental catering services — being a property of the Union of India through the Western Railway General Manager — falls squarely within the exemption provision, particularly carved out by Article 285 of the Constitution of India, which exempts the property of the Union from the state tax. It was further argued that “the definition of the term ‘dealer’ would not include the Railways or the Union of India and any attempt which is now made to include it is beyond the competence of the state legislature”.

The bench, after going through the facts of the case and relying on several high court and Supreme Court judgments that have previously dealt with similar issues, said, “The court concluded that the Railways cannot argue on the above lines.”