2013 (3) TMI 335 - Commissioner - Service Tax

Cleaning services rendered to Child Trust Hospital - outdoor catering services - Cenvat credit with abatement under Notification No. 1/2006-S.T. ( 50% abatement ) - Extended period of limitation - Held that - since they are filing returns regularly and their unit is audited periodically, the Department is aware about the fact of the services rendered by them. Thus it can be safely concluded that there is no suppression of facts with an intent to evade payment of tax in the instant case. - Thus, the demand in the instant case is partly hit by limitation of time and the period w.e.f 1-10-2007 alone will survive as it is within a period of one year from the relevant date. Regarding Cleaning services provided to non commercial organization - held that - the appellant is right in not paying Service tax on the cleaning service imparted to Child Trust Hospital, which is not a commercial building. - Ministry s Circular Nos. 96/7/2007-S.T., dated 23-8-2007 and No. 107/01/2009-S.T., dated 28-1-2009 to demand Service Tax not applicable in the instant case. - Demand set aside - Decided in favor of assessee. Regarding benefit of abatement availed alongwith Cenvat Credit - outdoor catering - held that - appellant had not fulfilled the conditions stipulated to avail the benefit of abatement - the appellant had to pay Service tax in full without availing the benefit of abatement towards outdoor catering services for the surviving demand period w.e.f. 1-10-2007. - Decided against the assessee.

Issues:
1. Time limitation on demand for Service tax.
2. Liability for Service tax on cleaning services.
3. Eligibility for abatement under Notification No. 1/2006-S.T. for outdoor catering services.
4. Penalties imposed under Sections 76 and 78 of the Finance Act, 1994.

Analysis:

1. Time Limitation on Demand for Service Tax:
The appellant argued that since they regularly filed returns and their unit was audited periodically, the Department was aware of the services rendered, indicating no intent to evade taxes. The Commissioner found merit in this argument, partly accepting the limitation of time defense. The demand was restricted to the period within one year from the relevant date, w.e.f. 1-10-2007.

2. Liability for Service Tax on Cleaning Services:
The appellant contended that services provided to a non-commercial organization, Child Trust Hospital, were not taxable. They cited Circulars and definitions to support their claim. The Commissioner agreed that the hospital did not fall under the purview of taxable services, as per the definition of cleaning activity. The Circulars relied upon by the Department were found to be inapplicable to the case, leading to a decision in favor of the appellant.

3. Eligibility for Abatement under Notification No. 1/2006-S.T.:
Regarding outdoor catering services, the appellant claimed to have availed abatement under Notification No. 1/2006-S.T. The Department argued against this, stating that the appellant had availed Cenvat credit on common input services, rendering them ineligible for abatement. The Commissioner upheld this argument, ruling that the appellant must pay Service tax in full for the relevant period.

4. Penalties Imposed under Sections 76 and 78:
The Lower Adjudicating Authority had imposed penalties under Sections 76 and 78 of the Finance Act, 1994. However, the Commissioner, considering the absence of intent to evade taxes and the interpretational nature of the non-payment issue, set aside the penalty under Section 78. Relief was granted under Section 80, as there was no suppression of facts with an intent to evade tax.

In conclusion, the Commissioner modified the Lower Adjudicating Authority's Order-in-Original, limiting the demand period, absolving the appellant from paying Service tax on cleaning services to the hospital, denying abatement for outdoor catering services, and setting aside the penalty under Section 78 while invoking Section 80. The appeal was disposed of based on these findings.

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