Srinivasa Out Sourcing Services Pvt Ltd. Vs Commissioner of Central Tax (CESTAT Hyderabad)
The CESTAT Hyderabad considered whether cleaning, sanitation and manpower services provided by the appellant to Government hospitals in Andhra Pradesh were exempt from service tax under Notification No. 25/2012-ST dated 20.06.2012 and whether the extended period of limitation was invocable. The appellant had provided cleaning and sanitation services to Government hospitals under agreements with the State Government and had not paid service tax, claiming exemption. A Show Cause Notice dated 16.06.2017 for the period 01.07.2012 to 31.03.2016 resulted in confirmation of service tax demand of ₹3,40,56,246 with interest under Sections 73(2) and 75 of the Finance Act, 1994, along with penalties under Sections 77 and 78. The Tribunal held that Government hospitals are run by the State Government and the services of sanitation, hygiene, waste disposal and cleaning provided to them fall within the exemption under Serial No. 25 of Notification No. 25/2012-ST. It found that the Commissioner had misread the notification. Relying on earlier Tribunal decisions affirmed by the Supreme Court, the Tribunal also held that the dispute involved interpretation of the exemption notification and there was no fraud, collusion, wilful default or suppression of facts. Consequently, the extended period of limitation could not be invoked. As no service tax liability survived on merits, the penalties were also unsustainable. The impugned order was set aside and both appeals were allowed.
