As the image of the paper cup tweeted by a passenger on Kathgodam Shatabdi went viral, the railways said it has withdrawn the cup and penalised the contractor.
Reports say the tea was served in these cups twice during the journey. The advertisement on the cup was by Sankalp Foundation, an NGO.
Several users tagged the Election Commission and brought to its notice about the violation of the Election Code of Conduct.
This issue comes days after the railways was found in violation of the poll code for issuing tickets with Prime Minister Narendra Modi's pictures on them. Later, the railways said that it was an "unintentional and inadvertent mistake".
"Reports that tea has been served in cups labelled as "main bhi chowkidar" have been investigated. This was without any prior approval of IRCTC. Explanation has been sought from supervisor/pantry Incharges over dereliction of duty.
"A fine of Rs 1 lakh fine has been imposed on the service provider. A showcause notice has also been served to the service provider for this misconduct," an IRCTC spokesperson told news agency PTI.
National carrier Air India and budget airline Go Air also had to "roll back" its boarding passes bearing photographs of Prime Minister Narendra Modi and Gujarat Chief Minister Vijay Rupani after drawing heavy criticism.