2014 (10) TMI 730 - AT - Service Tax

Classification of service - Cleaning service or Business Auxiliary Service - Held that - If it is cleaning service, normally the area to be cleaned and the nature of cleaning, the periodicity etc. would be specified. Moreover the amount payable for the services rendered would not be based on number of vehicles and from the work order and the certificate provided by a receiver of service, we find that the appellants were paid only on the basis of number of vehicles provided for shifting of slurry from settling tank to disposal yard and there is no evidence of any payment made by taking into account other services provided. No doubt in the invoices the appellant, who is an individual, has mentioned the service provided as cleaning service but the actual facts are otherwise. Service provided by the appellant appears to be supply of tangible goods since the payment is made on number of vehicles provided and appellants have discharged their liability for the period subsequent to 16/05/2008 and have been paying service tax which would mean that the conditions for treating the service as supply of tangible goods has been accepted by the appellant himself for the period subsequently. The service has not been reclassified after 16/05/2008 also even though the matter was adjudicated and it was contended that service provided was not cleaning service. Under these circumstances, even if the appellant does not have a strong case on merits which in our opinion may not be a fact yet the appellant would be entitled to the benefit of limitation - there is no pre-deposit required to hear the appeal and accordingly, the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal - Stay granted.

Summary

Issues:
Demand for service tax on the appellant for providing cleaning services, Penalty imposition under various sections of Finance Act 1994, Interpretation of the nature of services provided by the appellant, Consideration of evidence and submissions by both parties, Determination of whether the service provided qualifies as supply of tangible goods, Decision on pre-deposit requirement for hearing the appeal.

Analysis:

The judgment by the Appellate Tribunal CESTAT Bangalore pertains to a case where a demand for service tax amounting to Rs. 12,35,740 for the period from 16/06/2005 to 15/05/2008 was confirmed against the appellant. The basis for this demand was that the appellant was allegedly providing cleaning services to the service receivers during the mentioned period. Additionally, penalties under various sections of the Finance Act 1994 were imposed on the appellant.

The appellant, represented by a Chartered Accountant, contested the claim of providing cleaning services. It was argued that the appellant's work primarily involved shifting slurry from a settling tank to a disposal yard using hired vehicles, as indicated in the Purchase Order. Despite the scope of work mentioning housekeeping and cleaning, it was clarified that the payment was based on the number of vehicles used for slurry transportation. The appellant rectified a registration mistake, initially applying under Business Auxiliary Service and later correcting it to 'supply of tangible goods' from 16/05/2008 onwards. A certificate from the service receiver supported the claim that no other services besides slurry transportation were provided.

On the contrary, the Department contended that the appellant was obligated to provide cleaning and housekeeping services in various areas, as per the records. The Department justified the demand based on these obligations outlined in the records.

After considering the arguments from both sides, the Tribunal noted that the payment received by the appellant was linked to the number of vehicles used for slurry transportation, indicating a supply of tangible goods rather than cleaning services. The invoices labeled the service as cleaning, but the actual nature of work was transporting slurry. The appellant had been paying service tax under the category of 'supply of tangible goods' since 16/05/2008, further supporting the reclassification of services.

Consequently, the Tribunal found that the appellant's service qualified as supply of tangible goods, and the appellant was granted the benefit of limitation. As a result, the pre-deposit requirement for hearing the appeal was waived, and a stay against recovery was granted during the appeal's pendency.