2020 (3) TMI 850 - AT - Service Tax

Levy of Service Tax - Cleaning Activity - removal of fly ash from the pond - HELD THAT - The cleaning activity has been defined under Section 65(24b) of the Finance Act. Cleaning activity means cleaning, including specialized cleaning services such as disinfecting, exterminating or sterilizing of objects or premises, of- (I) commercial or industrial buildings and premises thereof or (ii) factory, plant or machinery, tank or reservoir of such commercial or industrial buildings and premises thereof, But does not include such services in relation to agriculture, horticulture, animal husbandary or dairying; - thus, cleaning service has been also defined in the Board s Notification F. No. B1/6/2005-TRU dated 27/07/2005. Also, in the present case, the activity of excavation and transportation of fly ash from the pond, for channeling the slurry water-flow cannot be termed as cleaning activity in terms of Section 65 (24B) of the Finance Act. The Respondent is not clearing the fly ash with the objective of cleaning the pond or free the pond from contamination. Fly ash is being excavated and transported to the specified areas as per the contract. Works Contract service - sub-contract - work done as a sub contractor for McNally Bharat Engineering Co. Ltd., Purba Medinipur Zilla Parishad and Rites Ltd. - HELD THAT - The contracts of railway in respect of Rites Ltd. under section 65(25b) of the Finance Act 1994. In the case of Purba Medinipur Zilla Parishad which relates evacuation of ash pond and it s transportation, this bench has already decided the issue in the case of the same assessee vide PURBA MEDINIPUR ZILLA PARISHAD VERSUS COMMISSIONER OF C. EX., HALDIA 2010 (5) TMI 369 - CESTAT, KOLKATA . Also, It cannot be urged that there was any wilful suppression of facts with an intention to evade payment of duty as is the requirement of Section 73(1) of the Act. The Learned Commissioner has erred in confirming the demand and invoking the provision of 73(1) of the Finance Act 1994 as well as in imposing the penalty u/s. 78 and u/s. 76 of the Finance Act 1994 - the impugned order cannot be sustained and the same is set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Classification of services under "Cleaning Service" for excavation of ash pond.
2. Tax liability as a sub-contractor for various contracts executed during different financial years.

Issue 1: Classification of services under "Cleaning Service" for excavation of ash pond:

The appellant challenged the demand of Service Tax amounting to ?1,11,86,688/- imposed by the Adjudicating Authority for engaging in excavation and transportation of fly ash from a pond, arguing that it did not qualify as a "cleaning activity" under Section 65(24b) of the Finance Act. The appellant contended that the removal of fly ash was not aimed at cleaning the pond but for commercial purposes, as fly ash was a saleable product used in manufacturing. The Tribunal agreed, citing the definition of "cleaning activity" under the Finance Act and previous decisions. The Tribunal found that the excavation and transportation of fly ash did not fall under the purview of "cleaning activity" and set aside the demand.

Issue 2: Tax liability as a sub-contractor for various contracts executed during different financial years:

The appellant also disputed the tax liability as a sub-contractor for contracts executed during different financial years, arguing that the demand notice was issued beyond the statutory limitation period and that there was no intention to evade duty. The Tribunal noted that the contracts in question were executed during specific financial years and that the appellant had submitted relevant documentation to support their claim. The Tribunal found merit in the appellant's argument and referenced previous decisions to support their conclusion. The Tribunal held that there was no wilful suppression of facts to evade duty and set aside the demand and penalties imposed by the Adjudicating Authority.

In conclusion, the Appellate Tribunal CESTAT KOLKATA, in the judgment delivered on 17 March 2020, allowed the appeal filed by the appellant on the grounds of limitation and merit. The Tribunal set aside the demand of Service Tax and penalties imposed by the Adjudicating Authority, ruling in favor of the appellant on both issues raised in the appeal.