2022 (4) TMI 302 - AT - Service Tax

Levy of Service Tax - rendering cleaning service mostly to non- commercial organizations, government hospitals, educational institutes - demand of service tax for the period April 2009 to March 2013 by invoking extended period of limitation - HELD THAT - On examining of one of the agreements, between the appellant and the Medical University, Greater Noida. The nature of the work was for charges for cleaning of the central road and the invoice raised by the appellant also confirmed the same that the appellant has been providing cleaning/sanitation services - Another agreement with Allahabad University is also examined, wherein the scope of the contract is of cleaning/ sanitation/removal of garbage from road of campus road of universities of Allahabad. It is found that in balance sheet, the appellant has shown non-taxable service and taxable service separately and in ST-3 returns they have shown taxable services on which they have paid service tax. But without examining the fact that the appellant has also provided the cleaning service, the demand of service tax sought to confirmed against the appellant on the basis of gross value of services provided by the appellant as shown in the balance sheet. The service tax which has already been paid by the appellant has been reduced and the balance amount of service tax demand has been proposed. Time Limitation - HELD THAT - The demand of service tax is barred by limitation as the service rendered by the appellant were well known to the Department in earlier proceedings, therefore, the subsequent show cause notice cannot be issued by invoking extended period of limitation On merit also, the fact is noted that no service tax was payable on cleaning services in terms of Sl. No. 12 of Notification No. 25/2012 ST dated 20 June 2012 wherein the services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration to Sl. No. 25A, wherein services provided to Government, a local authority or a governmental authority by way of carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation are exempt from payment of service tax . As the cleaning service has been exempt from payment of service tax in terms of the negative list to the Notification No. 25/2012- ST dated 20 June 2012, therefore, the appellant is not liable to pay service tax on cleaning services - If the same is excluded from the taxable service quantify by the Adjudicating Authority on the basis of gross value of services shown by the appellant in balance sheet, the appellant has paid service tax for supply of the para-medical services i.e. manpower recruitment and supply agency service. The demand of service tax is not sustainable against the appellant - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Demand of service tax along with interest and penalties.
2. Applicability of extended period of limitation.
3. Classification of services provided by the appellant.
4. Examination of agreements and invoices.
5. Previous audit findings and their relevance.
6. Exemption under Notification No. 25/2012-ST.
7. Allegations of suppression of facts.

Detailed Analysis:

1. Demand of Service Tax Along with Interest and Penalties:
The appellant was issued a show cause notice demanding service tax amounting to ?2,84,72,839/- along with interest and various penalties. The demand was based on the classification of services provided by the appellant, which included cleaning services and manpower supply services. The appellant argued that cleaning services provided to non-commercial organizations, government hospitals, and educational institutes were not taxable, and they had already paid service tax on manpower supply services.

2. Applicability of Extended Period of Limitation:
The appellant contended that the demand was barred by limitation as the department was already aware of their activities from previous audits and proceedings. Citing the Supreme Court's decision in Nizam Sugar Factory vs. Collector of Central Excise, the appellant argued that the extended period of limitation could not be invoked since the facts were already known to the department. The Tribunal agreed with this contention, holding that the demand was barred by limitation.

3. Classification of Services Provided by the Appellant:
The Tribunal examined various agreements and invoices to determine the nature of services provided. Agreements with the Medical University, Greater Noida, and Super Specialty Pediatric Hospital & Post Graduate Teaching Institute, Noida, indicated that the appellant provided cleaning and sanitation services. The appellant also provided manpower services to hospitals, for which they charged and paid service tax.

4. Examination of Agreements and Invoices:
The Tribunal scrutinized the agreements and invoices to ascertain the exact nature of activities. It was found that the appellant had correctly classified and paid service tax on manpower supply services, while cleaning services provided to non-commercial entities were not taxable. The Tribunal criticized the department for not examining these documents before issuing the show cause notice.

5. Previous Audit Findings and Their Relevance:
The Tribunal noted that an earlier audit had been conducted for the period 2009-2010 to 2012-2013, and a demand was raised based on the gross value of services without considering exemptions. The Tribunal held that the department's knowledge from previous audits precluded the invocation of the extended period of limitation for subsequent demands.

6. Exemption Under Notification No. 25/2012-ST:
The Tribunal held that cleaning services provided to government entities were exempt under Notification No. 25/2012-ST, which exempts services related to public health, sanitation, and solid waste management provided to government or local authorities. The appellant's cleaning services fell under this exemption, making them non-taxable.

7. Allegations of Suppression of Facts:
The Tribunal found no merit in the department's allegation of suppression of facts. It was established that the appellant had disclosed all relevant information in their balance sheets and ST-3 returns. The Tribunal reiterated that once the department had knowledge of the facts, subsequent show cause notices could not allege suppression for invoking the extended period of limitation.

Conclusion:
The Tribunal set aside the impugned order, holding that the demand of service tax was barred by limitation and that cleaning services provided by the appellant were exempt under Notification No. 25/2012-ST. The appeals filed by the appellants were allowed, and the order was pronounced in open court on 28/03/2022.

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