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2025 (3) TMI 432 - AT - Service TaxClassification of services - Cleaning service or not - services in the nature of upkeep/maintenance of platforms dry sweeping of empty rakes and mechanized yard cleaning railway platform cleaning disposal of accumulated garbage to designated placed on-board housekeeping service in reserved coaches of Poorva Express and cleaning of Sonpur Railway Station platform and its surrounding area to the South Eastern Railways - exemption from Service Tax under Sl. No. 25 of N/N. 25/2012-S.T. dated 20.06.2012 - extended period of limitation - penalty. Demand of Service Tax for the period up to 30.06.2012 - HELD THAT - The cleaning activity rendered is liable to Service Tax only if the same are rendered in respect of commercial or industrial buildings and premises or factory plant or machinery tank or reservoir of such commercial or industrial buildings and premises which are all commercial in nature. However we find that in this case the services were rendered by the appellant to the Indian Railways which is a Government of India Organisation. The Department of Railways cannot be called as a commercial concern as its operations of passenger transportation of passengers in trains is meant for the welfare of the general public and it cannot be considered as an activity done with a profit motive. In these circumstances the cleaning services rendered by the appellant cannot be held liable to Service Tax for the period up to 30.06.2012. Tribunal in the case of R.K. Refreshment Enterprises (P) Ltd. v. Commissioner of C.Ex. Raipur 2018 (2) TMI 1412 - CESTAT NEW DELHI wherein it was held that The original authority gave a reason that railway coaches are either standing on platform or running on the track and the same are to be considered as object on the premises for Indian railway holding railway coaches and contracts constituents of capital assets and machinery of Indian railway the original authority held cleaning of such railway coaches will be considered as cleaning of commercial premises. The coaches are rolling stock of railways. They are for transport mode and cannot fall under the commercial object of industrial building factory plant or machinery etc. The interpretation of the original authority is far fetched and not sustainable in view of the plain meaning of the statutory definition for tax entry. The demand of Service Tax confirmed in the impugned order for the period up to 30.06.2012 under the category of cleaning service is not sustainable Demand of Service Tax for the period after 01.07.2012 - HELD THAT - The appellant has been rendering the said services to the Indian Railways and it is on record that they were in correspondence with the Indian Railways regarding their Service Tax liability. The Indian Railways had instructed that the services rendered to them are not liable to Service Tax vide Circular dated 03.05.2013 and a letter dated 03.06.2013. Further it is observed that when the Indian Railways asked the appellant to obtain registration under works contract service they immediately took registration on 01.10.2013. Subsequently when they came to know that Service Tax is not being paid by others who were undertaking similar businesses they stopped paying Service Tax and filed nil Return for the period from October 2014 to March 2015 by availing the benefit of Entry No.25 of Notification No. 25/2012-S.T. dated 20.06.2012. Thus the appellant has always acted as per the direction of Indian Railways. Eligibility of the exemption as provided under Entry No. 25 of N/N. 25/2012-S.T. dated 20.06.2012 - HELD THAT - There is no dispute that the appellant has rendered the services namely upkeep/maintenance of platforms dry sweeping of empty rakes and mechanized yard cleaning railway platform cleaning disposal of accumulated garbage to designated placed on-board housekeeping service in reserved coaches of Poorva Express and cleaning of Sonpur Railway Station platform and its surrounding area to a Government body viz. the Indian Railways. The services rendered by the appellant are in the nature of public health sanitation conservancy and solid waste management . Entry No.25 of the Notification 25/2012-ST exempts all such services which are rendered to Government as the same are otherwise exempted from service tax when rendered by a Municipality. Accordingly we find that the services rendered by the appellant are squarely covered within the ambit of Sl. No. 25 of Notification No. 25/2012-S.T. dated 20.06.2012. The appellant has rightly claimed exempted under the above Notification for the services rendered to the Indian Railways. Time limitation - Penalty - HELD THAT - The appellant being a contractor engaged by the Indian Railways took registration and paid Service Tax upon being advised by the Indian Railways. Thus it is not a case where the appellant has collected and not paid the Service Tax to the Department. It is a case where the appellant had entertained a doubt as to their Service Tax liability and were firmly of the view that the services rendered were exempt as per Sl. No. 25 of Notification No. 25/2012-S.T. Therefore there is no suppression of facts with intention to evade the tax on the part of the appellant existing in this case. Hence the demand of Service Tax by invocation of the extended period of limitation is not sustainable. For the same reason no penalty imposable on the appellant. Conclusion - The services rendered by the appellant are eligible for the exemption as provided under Sl. No. 25 of N/N. 25/2012-S.T. dated 20.06.2012 as claimed by the appellant since the said services are in the nature of public health sanitation conservancy and solid waste management which are otherwise provided by the municipality to the general public. Accordingly the demand of Service Tax confirmed in the impugned order is not sustainable. Since the demand itself is not sustainable the question of demanding interest and imposing penalty on the appellant company does not arise. The impugned order is set aside - appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS Exemption under Notification No. 25/2012-S.T. The relevant legal framework is Notification No. 25/2012-S.T. dated 20.06.2012, which exempts services provided to the Government, a local authority, or a governmental authority by way of activities ordinarily entrusted to a municipality, such as public health and sanitation conservancy. The Tribunal observed that the appellant rendered services such as platform cleaning and garbage disposal to Indian Railways, a government entity. These services align with functions typically managed by a municipality, thus qualifying for exemption under the notification. The Tribunal rejected the adjudicating authority's view that services must be in a 'public area' to qualify for exemption, noting that railway platforms and coaches are accessible to the public. Classification as "Cleaning Service" Under Section 65(105)(zzzd) of the Finance Act, 1994, 'cleaning activity' is taxable if performed on commercial or industrial premises. The Tribunal found that Indian Railways, being a government entity, does not constitute a commercial concern. Citing precedents like R.K. Refreshment & Enterprises (P) Ltd., the Tribunal concluded that the services provided do not fall under the taxable category of 'cleaning service' as defined. Service Tax Liability Post 01.07.2012 For the period after 01.07.2012, the Tribunal noted that the adjudicating authority failed to establish liability under Section 66B of the Finance Act, 1994. The demand was incorrectly confirmed under provisions applicable only until 30.06.2012. Thus, the Tribunal found no basis for the service tax demand post-01.07.2012. Limitation Period The Tribunal examined whether the extended period of limitation was applicable. The demand was based on disclosed records, with no evidence of suppression or intent to evade tax. Citing the case of Munna Construction, the Tribunal held that the extended period was not invocable, rendering the demand time-barred. Penalties Given the conclusion that the service tax demand was unsustainable, the Tribunal found no grounds for imposing penalties on the appellant or its partner. SIGNIFICANT HOLDINGS The Tribunal's significant holdings include:
In conclusion, the Tribunal set aside the impugned order, allowing the appeal filed by the appellant, and determined that the services rendered were exempt from Service Tax, with no penalties applicable.
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