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2015 (1) TMI 454 - Commissioner - Service TaxCleaning Services and Management, Maintenance or Repair Services - On repeated requests the appellants failed to provide the details of services provided by them and accordingly, the value of services were obtained from the Thermal Plant - Held that - cleaning activity relating to commercial or industrial building, factory, plant or machinery, tank or reservoir of such commercial or industrial building and premises, is covered under the said category, but it does not include cleaning services in relation to agriculture, horticulture, animal husbandry or dairying as well as non-commercial building and premises thereof. I observe that Generation of electricity is an industrial/commercial activity and therefore, the buildings, where plant and machinery is installed and industrial activities are undertaken, cannot be considered as non-commercial or non-industrial buildings. One thing that comes out very clearly from the above deliberations is the activity of generation of electricity is a commercial activity and the concern engaged in commercial activity is a Commercial Concern only. Thus, I observe that the there is not even iota of doubt that the Thermal Plant, Ropar is a Commercial Concern . Thermal plant was the property of Punjab Govt., and hence being a public concern, no service tax was leviable. I find this plea of the appellants is not relevant for the cases where the any Govt./Municipal Corporation or a statutory body provides services which are for commercial consideration. The exemptions to a Govt, body are admissible only if the services provided and the charges for the same were statutory in nature. This essence can be derived from C. B. E. & C. s Circular No. 80/10/2004-S.T., dated 17-9-2004 - circular goes on to clarify that Govt. Building or civil constructions used for providing civic amenities would not be taxable. But the Circular also clarifies that even Govt, buildings used for commercial activity would be liable to service tax. In the instant case, the services have been provided to an industry engaged in business and commerce. Though the issue referred to and relied upon by me is in respect of construction services but the essence of the same is that if the Govt. bodies avail the services in respect of buildings to be used for commercial purposes, then the same would be liable to service tax. Services did not involve cleaning of any commercial or industrial buildings or premises, tanks etc but involved only cleaning of paths, drains, approaches to buildings etc. as enumerated above. Such services are not covered within the definition of Cleaning services . The appellants had received an amount of ₹ 9,79,424/-, for the services so provided and this amount received is liable to be excluded from the taxable value being consideration of non-taxable services. - demand against the appellants is recalculated, after excluding the value of services provided in the Nuhon colony - service tax demand stands reduced along with interest thereon. There is no contention of the party as regards imposing of penalty under Section 77 of the Act is concerned and hence the same is upheld. Similarly, penalty under Section 78 of the Act is not contested. I find that adjudicating authority had held that the party had deliberately evaded payment of service tax by suppressing the material facts from the department and actions of the party call for penalty under Section 78 of the Act. The party has not contested this fact in the present proceedings. Thus, I hold that the party was also liable to penalty under Section 78 of the Act, equivalent to the demand of Service Tax of ₹ 2,41,358/-, upheld in the present proceedings. Thus, the penalty payable under Section 78 of the Act would stand reduced - Decided partly in favour of assessee.
Issues Involved:
1. Taxability of services provided under various contracts. 2. Applicability of service tax on services provided to a government-owned thermal plant. 3. Classification of services under "Cleaning Services" and "Management, Maintenance or Repair Services". 4. Exemption claims for specific services. 5. Imposition of penalties under Sections 77 and 78 of the Finance Act, 1994. Detailed Analysis: Issue 1: Taxability of Services Provided Under Various Contracts The appellants provided services such as cleaning of boiler area, station service building in Nuhon Colony, technical and non-technical buildings, and repair modification of cabins for lift control panels. The adjudicating authority confirmed the demand of service tax of Rs. 3,42,238/- under Section 73 of the Finance Act, 1994, along with interest and penalties. The appellants argued that certain services were not taxable based on the nature of the area (non-commercial) or specific exemptions. Issue 2: Applicability of Service Tax on Services Provided to a Government-Owned Thermal Plant The appellants contended that since the thermal plant was the property of the Punjab Government, no service tax was leviable. However, it was determined that the thermal plant engaged in the commercial activity of electricity generation, qualifying it as a "Commercial Concern". The decision in Nagarjuna Construction Co. v. CCE was deemed inapplicable as the services were provided for commercial purposes. Issue 3: Classification of Services Under "Cleaning Services" and "Management, Maintenance or Repair Services" The definition of "Cleaning Services" under Section 65(24b) of the Finance Act, 1994, includes cleaning of commercial or industrial buildings and premises, excluding agriculture, horticulture, animal husbandry, or dairying. The services provided to the thermal plant, including routine cleaning and sweeping, were scrutinized to determine if they fell under taxable categories. It was concluded that cleaning services provided to commercial or industrial buildings are taxable, while those for non-commercial areas are not. Issue 4: Exemption Claims for Specific Services The appellants claimed exemptions for various services: - Routine Cleaning & Sweeping in Nuhon Colony: The services did not involve cleaning of commercial or industrial buildings but rather paths, drains, and approaches to buildings. Therefore, Rs. 9,79,424/- received for these services was excluded from the taxable value. - Repair of Cabin for Lift Control Panel and Restoration of Pathways Along Railway Track: These services were deemed taxable as they were part of civil construction work for a commercial concern. - Routine Cleaning of Station Building: Despite the appellants' claim that only "pocha type" cleaning was done, it was determined that all cleaning activities related to commercial or industrial buildings are taxable. - Routine Cleaning of Technical & Non-Technical Buildings: The appellants' reliance on Circular No. B-1-6-2005-TRU was found inapplicable for the period in question. Cleaning services for both technical and non-technical buildings in a commercial concern were deemed taxable. Issue 5: Imposition of Penalties Under Sections 77 and 78 of the Finance Act, 1994 The penalty under Section 77 was upheld as uncontested. The penalty under Section 78 was imposed due to deliberate evasion of service tax by the appellants, who suppressed material facts. The penalty was reduced to Rs. 2,41,358/- in line with the recalculated service tax demand. Conclusion: The demand against the appellants was recalculated, excluding the value of non-taxable services provided in Nuhon Colony, resulting in a reduced service tax demand of Rs. 2,41,358/- along with interest. The penalties under Sections 77 and 78 were upheld, with the penalty under Section 78 also reduced to Rs. 2,41,358/-. The appeal was partially allowed, and the stay application was disposed of accordingly.
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