2018 (5) TMI 787 - AT - Service Tax

Liability of service tax - Cleaning Services - Management, Maintenance, Repair Services - Cargo Handling Services etc. - Held that - service tax levy of cleaning service cannot be levied on cleaning of railway wagons and coaches, as has been held by the Tribunal in the case of M/s R. K. Refreshment and Enterprises Pvt. Ltd. and Another - However, in respect of railway buildings, premises, the same will be covered under the category of cleaning of commercial or industrial buildings and premises thereof and hence liable to payment of service tax under the Cleaning Service - Since the adjudicating authority has clubbed both the categories and raised demand of service tax amounting ₹ 72,51,533/- under Cleaning Service, we direct the original authority to bifurcate the demand and confirm the same only to the extent of the cleaning activity of railway premises. Cleaning and house-keeping of railway running rooms, washing and cleaning of bed sheets, pillow covers etc. - adjudicating authority has demanded the service tax on these services under the category of management, maintenance or repair service - Held that - it cannot be readily observed whether the services falling under this category were proposed for classification under management or maintenance service. Hence, we direct the adjudicating authority to uphold the demand of service tax under this category if the same was proposed for classification, in the show cause notice under the category of cleaning service. Water tightening of wagons in monsoon season, maintenance of passenger amenities, running maintenance, repair, replacement of defective carriage watering hydrants and provisioning maintenance of water etc. - Held that - We uphold the service tax demand in respect of the three categories under the maintenance, management or repair service - since this involves interpretation and classification of the service into different categories, penalties set aside. Supply, maintenance and supervision of mechanised machineries to be used for cleaning of various railway stations - Held that - the service is to be considered as supply of tangible goods service only in those cases which do not fall within the ambit of VAT. The adjudicating authority is directed to verify the claim of the appellant that VAT applicable to the transaction have been paid. Appeal allowed by way of remand.

Summary

Issues:
Service tax demand on various services provided to Railway

Analysis:
The appellant provided various services to the Railway, leading to a dispute regarding the liability to pay service tax for the period 2005-2006 to 2009-2010. The total demand of service tax was confirmed under different categories, including Cleaning Services, Management, Maintenance, Repair Services, and others. The appeal challenged the Order-in-Original that confirmed a service tax demand of &8377; 1,04,48,970/- along with interest and penalties under the Finance Act, 1994.

Mechanised Washing and Cleaning Services:
The Tribunal analyzed the demand for service tax related to mechanized washing and cleaning of railway wagons and coaches. The appellant argued that these services should not be liable to service tax under the category of cleaning services. The Tribunal referred to previous decisions and concluded that while cleaning railway wagons and coaches does not attract service tax, cleaning of railway premises falls under the category of cleaning of commercial or industrial buildings, making it liable for service tax.

Cleaning and House-keeping Services:
The Tribunal examined the demand for service tax on cleaning and house-keeping of railway running rooms, bed sheets, and pillow covers. It was observed that these services should be classified under Cleaning Services rather than management, maintenance, or repair services. The Tribunal directed the adjudicating authority to confirm the demand under the appropriate category based on the show cause notice.

Maintenance and Repair Services:
The appellant did not dispute the liability of certain services like water tightening of wagons, maintenance of passenger amenities, and running maintenance for payment of service tax. The Tribunal upheld the service tax demand for these categories, with a waiver of penalty if the tax liability with interest was paid before the show cause notice.

Supply of Tangible Goods Services:
Regarding the supply, maintenance, and supervision of mechanized machinery for cleaning railway stations, the Tribunal directed the adjudicating authority to verify if VAT was paid on the transaction. If VAT was paid, the service tax demand under the category of Supply of Tangible Goods Service should be set aside.

Washing and Dry-cleaning Services:
The Tribunal upheld the levy of service tax on washing and dry-cleaning services as the appellant did not contest this part of the demand.

In conclusion, the appeal regarding the demand of service tax was disposed of with specific directions for each category of services, allowing the appellant to submit additional evidence for services requiring re-determination before the lower authorities.