2018 (8) TMI 816 - AT - Service Tax

Refund claim - Cleaning services provided to educational institution - whether the building of ISB can be considered as non-commercial building or commercial building? - Held that - It is not in doubt that Indian School of Business is registered as a company under the Companies Act and is engaged in the business of teaching management. This activity of the Indian School of Business does not make it a non-commercial institution; it is a commercial institution engaged in the business of providing management education. They would have been covered under the Commercial Training and Coaching Services but for the exclusion clause therein. There is no such exemption as far as cleaning activity rendered by the appellant is concerned and there is no reason to treat the buildings and premises of Indian School of Business anything other than commercial buildings and premises for the purpose of cleaning services - the cleaning activity rendered by the appellant is not excluded from the scope of service tax. Appeal rejected - decided against appellant.

Summary

Issues:
1. Applicability of service tax on cleaning services provided to an educational institution.
2. Interpretation of CBEC Circulars regarding the scope of service tax on cleaning services.
3. Classification of the educational institution as a commercial or non-commercial building.
4. Exclusion of cleaning services from service tax based on the nature of the building.

Analysis:
1. The appellants provided cleaning services to an educational institution and paid service tax under Management Maintenance and Repair service until a separate service for cleaning activity was introduced. They stopped paying service tax, claimed a refund, and later ceased payment altogether. The Department issued show cause notices for non-payment, contending that the cleaning services rendered are taxable. The issue was whether the cleaning services provided to the educational institution are liable to service tax.

2. The appellants argued that the educational institution falls under the exclusion clause for commercial training or coaching services, thus cleaning services should also be excluded. The Department argued that cleaning services provided to commercial organizations, including Railways and Airport Authority, are taxable. The Tribunal considered these arguments and relevant case laws.

3. The Tribunal analyzed the definition of "cleaning activity" under the Finance Act, 1994, which includes cleaning of commercial or industrial buildings. The question was whether the educational institution's buildings should be classified as commercial or non-commercial for service tax purposes. The Tribunal concluded that the educational institution, despite being engaged in teaching management, is a commercial institution, and its buildings are commercial for cleaning services.

4. Referring to CBEC Circulars, the Tribunal emphasized that cleaning services provided to commercial or industrial buildings are taxable under service tax laws. The Tribunal found no reason to exempt the cleaning activity provided to the educational institution from service tax, as even public service entities like Railways were considered commercial for cleaning services. Therefore, the appeals were rejected, and the appellants were liable to pay service tax on the cleaning services provided.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by both sides, relevant legal provisions, and the Tribunal's reasoning leading to the decision.