2014 (12) TMI 377 - AT - Service Tax

Waiver of pre deposit - Cleaning Service - slag is removed from the factory to the slag yard for undertaking extraction of metal - Demand of interest and penalty - Held that - no doubt the slag is removed from the factory to the slag yard. But it is removed for undertaking extraction of metal and not for disposal as waste. Such slag is cooled by spraying water and thereafter metal is removed by using magnetic force. Different types of activities undertaken by them explained in scope of work and the schedule of appellant would show that prima facie except for Sl. No. 4 of the table showing the schedule of rates, the other items cannot be considered as a cleaning activity. Since both the sides could not indicate what exactly is the amount collected by the appellants for each category of activity, the only option available to us is to arrive at an approximate figure we do by dividing the amount paid for cleaning activity under Sl. No. 4 by the total amount payable to the appellant for all the activities per ton - Partial stay granted.

Summary

Issues: Classification of services under 'Cleaning Service' for service tax liability.

In this case, the appellant, a partnership firm registered under the category of Cleaning Service, was found to have rendered services to a company prior to registration without discharging the service tax liability. The proceedings resulted in a demand for service tax, interest, and penalty under Section 78 of the Finance Act 1994. The definition of 'Cleaning Service' under Section 65(24b) includes specialized cleaning services for commercial or industrial buildings, machinery, and premises. The definition of 'taxable service' under Section 65(105)(zzzd) encompasses any service related to cleaning activity. The appellant's activities included cleaning of slag pits, transportation of slag, filling slag pots, and other associated tasks like cleaning converter alleys and assisting in scrap pit cleaning. The contract price for various jobs primarily related to cleaning operations in an industrial setting. The Tribunal found that the services provided were rightly classifiable under 'Cleaning services' as defined in the Act, making the appellant liable for service tax.

The appellant argued that the activities undertaken, such as removing slag for metal extraction, did not qualify as 'cleaning services' as per the definition. The appellant contended that the entire process could not be considered cleaning in terms of the statutory definition. However, the respondent highlighted that the removal of slag from the factory for metal extraction constituted a cleaning activity. The respondent argued that any activity involving clearing or removing objects within the specified premises fell under cleaning services. The respondent emphasized that even in common parlance, 'cleaning' involves getting rid of impurities, and in this case, waste generated during manufacturing processes was being removed to keep the premises clean.

The Tribunal observed that while slag was removed for metal extraction rather than disposal as waste, the activities undertaken by the appellant did not entirely align with the definition of 'cleaning services.' Due to the lack of specific information on the amounts collected for each category of activity, the Tribunal calculated an approximate figure for the amount payable by the appellant towards cleaning activities. The Tribunal directed the appellant to deposit a specific amount towards pre-deposit within a stipulated time frame. Upon compliance, the requirement for pre-deposit of the balance dues was waived, and a stay against recovery was granted. The operative part of the order was pronounced in open court on a specified date.