2024 (6) TMI 1264 - AT - Service Tax

Levy of service tax - cleaning services - services provided by the appellant to Guru Gobind Singh Super Thermal Plant under the head of cleaning services - period 16.06.2005 to 31.03.2010 - time limitation. Levy of service tax - HELD THAT - From the definition of cleaning activity, it is clear that the cleaning activity would cover cleaning of commercial or industrial building or premises thereof for factory, plant or machinery, tank or reservoir of such commercial or industrial building or premises - the argument of the Ld. Counsel that the thermal plant is the property of the Punjab Government and being a public utility concern no service tax is leviable, does not have the force, in view, CBEC s circular No. 80/10/2004-ST., dated 17.09.2004. The Tribunal in the case of M/S. B.M. CHAPALKAR AND COMPANY VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS, NASHIK AND VICE-VERSA 2016 (2) TMI 844 - CESTAT MUMBAI held that ' On perusal of agreement entered into with Nasik Tharmal Power Station, we find that the Cleaning services which were expected out of appellant is very clear that there is no doubt the appellant has been awarded contract for Cleaning of plant machinery, buildings, ete. At the same time, we also find that the contract which is awarded to the appellant, also has elements of loading and unloading of Coal, to our mind, value in respect of such loading and other activities may not be covered under the category of Cleaning Agency Services.' The appellants are liable to pay service tax on cleaning services rendered to Guru Gobind Singh Super Thermal Plant. Extended period of limitation - HELD THAT - To sustain a show cause notice beyond the normal period of limitation and up to a period of five years, it has to be established that the service tax has not been paid or short-paid, by reasons of either fraud or collusion or willful misstatement or suppression of facts or contravention of any provision of the Finance Act or the Rules made there under, with intent to evade payment of tax. Further, it is found that in the present case the appellant was under a bonafide belief that service tax is not payable being services provided to the Government of Punjab and not to any commercial organization - the issue of interpretation of the legal provision is involved and therefore invocation of extended period of limitation is not warranted in the present case. The demand of service tax only for the normal period confirmed and matter remanded back to the original authority to quantify the demand of service tax on cleaning services for the normal period along with interest; invocation of extended period of limitation is set aside. Hence, the penalty is also set aside. Appeal allowed by way of remand.

Summary

Issues Involved:
1. Taxability of cleaning services provided to a state-owned thermal plant.
2. Applicability of service tax on services provided to non-commercial concerns.
3. Invocation of the extended period of limitation for service tax demand.
4. Allowance of cum-tax benefit to the appellant.

Detailed Analysis:

1. Taxability of Cleaning Services Provided to a State-Owned Thermal Plant:
The appellant, a cooperative society providing "cleaning services" to Guru Gobind Singh Super Thermal Plant, was issued a show cause notice demanding service tax for services rendered from June 2005 to March 2010. The Commissioner (Appeals) dropped the demand for three services but upheld the demand for one service amounting to Rs. 4,46,562/- along with interest and penalties under Sections 77 and 78 of the Finance Act. The Tribunal examined the definition of "cleaning activity" under Section 65(24b) of the Finance Act, 1994, which includes cleaning of commercial or industrial buildings and premises. The Tribunal found that the services provided by the appellant fell within the taxable category of cleaning services.

2. Applicability of Service Tax on Services Provided to Non-Commercial Concerns:
The appellant argued that the thermal plant, being a state undertaking, was not a commercial concern, and thus, the cleaning services provided should not be taxable. However, the Tribunal referred to CBEC's Circular No. 80/10/2004-ST., which clarifies that government constructions used for commercial purposes are taxable. The Tribunal also cited precedents, including B.M. Chapalkar and Company vs. Commr. Of C. Ex. & Cus., Nashik, and Sarovar Hotels Pvt. Ltd. vs. Commr. of Cus., C. Ex. & S.T., Hyderabad-IV, to support the view that cleaning services provided to commercial or industrial premises are taxable, regardless of the ownership of the premises.

3. Invocation of Extended Period of Limitation for Service Tax Demand:
The Tribunal considered the appellant's contention that the extended period of limitation was wrongly invoked. The extended period can be invoked in cases of fraud, collusion, willful misstatement, suppression of facts, or contravention of provisions with intent to evade tax. The Tribunal found that the appellant was under a bonafide belief that service tax was not payable as the services were provided to the Government of Punjab. Citing various judgments, including Uniworth Textiles Ltd. v. CCE and Chamundi Die Cast P. Ltd. v. CCE, the Tribunal concluded that the extended period of limitation could not be invoked due to the bonafide belief and the interpretative nature of the legal provisions involved.

4. Allowance of Cum-Tax Benefit to the Appellant:
The Commissioner (Appeals) allowed the cum-tax benefit to the appellant, which was upheld by the Tribunal. This benefit reduces the service tax liability by considering the service tax element included in the gross amount charged for the services.

Conclusion:
The Tribunal upheld the service tax demand for the normal period and remanded the matter back to the original authority for quantification of the demand along with interest. The invocation of the extended period of limitation was set aside, and consequently, the penalties were also set aside. The appeal was allowed by way of remand on these terms.