Marshall Corporation Ltd. Vs Commissioner of CGST & Central Excise (CESTAT Kolkata)
Summary: The Customs, Excise & Service Tax Appellate Tribunal, Kolkata considered whether the appellant’s activity of evacuating fly ash from silos and hydro bins of CESC Ltd.’s thermal power stations was taxable as “Cleaning Services” under Section 65(24b) of the Finance Act, 1994, or was essentially transportation of goods under the GTA category. The appellant had entered into an agreement with CESC Ltd. and received Rs 2,28,54,941/- during 16.06.2005 to 04.01.2007. The Department treated the activity as cleaning and, following proceedings initiated through notice dated 30.05.2007, demanded service tax and Education Cess of Rs 25,70,853/-. The adjudicating authority confirmed service tax of Rs 8,93,116/- with interest and imposed penalty of Rs 17,50,000/- under Section 78. The Commissioner of Service Tax thereafter reviewed the order and passed a Revision Order dated 02.03.2010 under Section 84(1), which was challenged before the Tribunal.
The Department’s case was that the definition of “Cleaning Activity” was broad enough to cover evacuation of material from an industrial tank or reservoir. The appellant contended that fly ash was not dirt or waste but had commercial utility and that its removal was undertaken as transportation of goods. The Tribunal examined the statutory definition, which covers cleaning of commercial or industrial buildings and premises and of factory, plant or machinery, tank or reservoir, while excluding specified agricultural and allied activities. It found that the appellant had not undertaken an activity falling within that definition. The fly ash was evacuated pursuant to the contract and its removal was necessary to enable continued receipt of further fly ash generated during manufacturing. The Tribunal therefore treated removal of the fly ash from the silos as an essential part of the production process rather than a cleaning activity.
The Tribunal also found the issue covered by its earlier decision in Commissioner of Central Excise & Service Tax, Ranchi v. M/s Hindustan Steel Works Construction Ltd., reported in 2018 (11) TMI 1217-CESTAT, Kolkata. That decision had considered excavation and transportation of fly ash and held that such activity was not “cleaning activity”, particularly where the fly ash was saleable and was being removed and transported pursuant to the contract rather than to clean or decontaminate the premises. The Tribunal further referred to M/s Calcutta Industrial Supply Corporation v. Commissioner of Service Tax, Kolkata, where transportation and disposal of ash was likewise found not to establish cleaning of the premises.
Applying those principles, the Tribunal held that the activities undertaken by Marshall Corporation Ltd. were not chargeable to service tax under the “Cleaning Service” category defined in Section 65(24b) of the Finance Act, 1994. The demands confirmed in the impugned Revision Order were therefore held unsustainable. The Tribunal set aside the impugned order and allowed the appeal with consequential relief, if any, as per law.
Cases Discussed
- Commissioner of Central Excise & Service Tax, Ranchi Vs M/s Hindustan Steel Works Construction Ltd., 2018 (11) TMI 1217-CESTAT, Kolkata
- Aakriti Construction (P) Ltd. Vs CCE, 2017 (7) G.S.T.L. 478 (Tri.-Del.)
- Calcutta Industrial Supply Corporation Vs Commissioner of Service Tax, Kolkata, 2017(11) TMI 158 (Tri.-Kol.)
FULL TEXT OF THE JUDGMENT/ORDER OF CESTAT, KOLKATA
The Appellant has been registered with Service Tax department under the category of GTA services. They have entered into an agreement with M/s CESC Ltd to evacuate fly ash from silos and hydro bins of various thermal power stations of M/s CESC Ltd. During the period 16.06.2005 to 04.01.2007, the Appellant received Rs 2,28,54,941/- from M/s CESC Ltd but not paid service tax. The department was of the view that the services rendered by the Appellant to M/s CESC would fall under the category of ‘Cleaning Services” liable to service tax as per Section 65(24b) of the Finance Act, 1994. Accordingly, a Notice dated 30.05.2007 was issued by DGCEI demanding service tax and Education Cess amounting to Rs 25,70,853/-. The Notice was adjudicated by Additional Commissioner vide order dated 27.02.2009 wherein the demand of service tax of Rs 8,93,116/- was confirmed besides demanding interest and imposing penalty of Rs 17,50,000/- under section 78 of the Finance Act,1994. The Commissioner of Service Tax reviewed the order and issued a Revision Order dated 02.03.2010, under Section 84(1) of the Finance Act, 1994.The Appellant is before us against this impugned order of revision.
2. In the Revision Order, the Department contended that ‘Cleaning Activity’ has been defined under Section 65(24b) of the Finance Act, 1994. As per the definition the service includes not only removal of dirt, but also means ‘cleaning’. It is broad enough to cover all types of cleaning activities. In the present case the cleaning/evacuation of tank/reservoir in industry comes well within the scope of ‘Cleaning Activity’ as defined under Section 65(24b) of the Finance Act, 1994. Accordingly, the Commissioner has confirmed the demand of service tax and Education Cess amounting to Rs 25,70,853/-, as demanded in the Notice dated, besides demanding interest and imposing penalty equal to the service tax confirmed under Section 78 of the Finance Act, 1994.
3. In their submissions, the Appellant stated that the activities under taken by them are rightly classifiable under GTA service and the tax liability is on the service recipient M/s CESC Ltd. They stated that the ‘fly ash’ removed from the silos is not dirt. It has commercial utility. Hence, removal of the same from the silos would not amount to ‘cleaning’.
4. The Ld Departmental Representative reiterated the grounds specified in the Revision Order.
5. Heard both sides and perused the appeal records.
6. We observe that the Appellant undertaken the activity of evacuation of fly ash from the silos and hydro bins of various thermal power stations of M/s CESC Ltd. The Appellant considered this activity as transportation of goods liable to service tax under the category of GTA service, whereas the Department considered that the activities would fall under the category of ‘cleaning service’ as defined in Section 65(24b) of the Finance Act, 1994. In order to understand the, cleaning service’ it is necessary to look into the definition, which is reproduced below:
“Cleaning activity” means cleaning, including specialized cleaning services such as disinfecting, exterminating or sterilizing of objects or premises, of
(i) Commercial or industrial buildings and premises the of; or
(ii) Factory, plant or machinery, tank or reservoir of such commercial or industrial buildings and premise thereof,
but does not include such services in relation to agriculture, horticulture, and animal husbandry or dairying.
7. A perusal of the above definition of ‘cleaning service’ indicates that the Appellant has not undertaken any of the activities specified therein. We observe that ‘fly ash’ is being evacuated and removed as per the contract and the same cannot be termed as a ‘cleaning activity’. The evacuation of ‘fly ash’ is required to continue the industrial activity. Unless the accumulated fly ash is removed from the silos, it cannot be utilized to receive further ‘fly ash’ emerging during the course of manufacturing. Thus, we observe that removal of ‘fly ash’ from the silos is an essential part of the production process.
8. We find that the issue is no more res Integra and has been decided by the Tribunal in the case of Commissioner of Central Excise & Service Tax, Ranchi vs. M/s Hindustan Steel works construction Ltd. reported in 2018 (11) TMI 1217-CESTAT, Kolkata. The relevant paragraphs of the above mentioned order are being reproduced:
“….8. The Ld. Advocate also contended that the fly ash is a saleable goods, which is use in the manufacture of ceramic tiles, mineral wool, etc. And is not a waste since, it is capable of being sold in the market. It is his submission that the removal of fly ash from the pond cannot be termed as cleaning activity under section 65(24b) of the Finance Act, and accordingly, no Service Tax would be attracted in this case. He relied upon the decisions of the Tribunal in the case of Aakriti Construction(p)Ltd, v.CCE,2017 (7) G.S.T.L 478 (Tri-Del.) and Calcutta Industrial Supply Corporation v. Commissioner of Service Tax, 2017(11) TMI 158 (TRI.-Kol).
We find that the cleaning activity has been defined under section 65(24b) of the Finance Act.
“Cleaning activity” means cleaning, including specialized cleaning services such as disinfecting, exterminating or sterilizing of objects or premises of Commercial or industrial buildings and premises thereof: or
Factory, plant or machinery, tank or reservoir of such commercial or industrial buildings and premises thereof, But does not include such services in relation to agriculture, horticulture, animal husbandry or dairying”.
We find that cleaning service has been also defined in the Board’s Notification F. No.B1/6/2005-TRU DATED 27/07/2005.
We also find that in the present case, the activity of excavation and transportation of fly ash from the pond, for challenging the slurry water flow cannot be termed as “cleaning activity” in terms of section 65(24B) of the Finance Act. The respondent is not cleaning the fly ash with the objective of cleaning the pond or frees the pond from contamination. Fly ash is also being excavated and transported to the specified areas as per the contract.
We observe that fly ash is a saleable goods which is further used in manufacture of bricks etc. and hence it is not waste, which is being removed from the pond. It has specific utility and capable of being sold in the market.
13. We find that the issue in the present case is covered by the declaration of this Bench in the case of M/S Calcutta industrial supply Corporation vs. .Commr. of Service Tax, Kolkata. The relevant para is reproduced below:-
8. Cleaning service:
8.1 The ld. Counsel submitted that the appellant is merely loading /lifting Ash from the Ash ponds, transporting it upto a distance of 25 kms. and unloading the same at the abandoned mines of ECL. It is further submitted that the contract is essentially for transportation of Ash and and not for rendering any cleaning activity. The Ld. Counsel fairly submitted that they are not contesting the amount of Rs.2,03,476/- on CHP maintenance work against cleaning service, which they have already paid.
8.2 The adjudicating authority observed that the appellant was allocated work by Damodar Valley Corporation (DVC) for removal of technological waste from CHP area, DTPS and it would come under cleaning service. It is further observed that the appellant entered into contract for cleaning of premises of an industry and would come under the cleaning service as defined under Section 65(24b) w.e.f. 16.06.2005.
8.3. The definition of leaning service under Section 65(24b) is reproduced below:
[(24b) cleaning activity means cleaning including specialized cleaning services such as disinfecting, exterminating of objects 65 24(b) of
(i) Commercial or industrial buildings and premises thereof; or
(ii) Factory, plant or machinery, tank or reservoir of such commercial or industrial buildings and remises thereof,
But does not include such services in relation to agriculture, horticulture, animal husbandary or dairying]
From the above definition, it is clear that the leaning activity would cover cleaning of commercial or industrial building or premises thereof or factory, plant or machinery, tank or Reservoir of such commercial or industrial buildings or premises.
8.4. It is seen from the letter dated 03.02.2004 of DVC that the appellant was awarded tender for excavation of Ash from different field of Ash ponds of DTPS, DVC, Waria, Nuisance free transportation and disposal of Ash DTPS, DVC, Waria, Nuisance free transportation and disposal of Ash in abandoned mines of ECL. It appears that the purpose of the tender is for disposal of Ash in the abandoned mines of ECL. The appellant is engaged for transportation and disposal of Ash in the abandoned mines. The letter does not show that the appellant was engaged for cleaning of the premises. Therefore, the demand of Service Tax under the category of cleaning service is not justified.
9. We observe that the facts of the present case are squarely covered by the aforesaid decision of this Bench. Accordingly, we hold that the activities undertaken by the Appellant are not chargeable to service tax under the category of ‘Cleaning Service’. Hence, the demands confirmed in the impugned Revision Order are not sustainable.
10. In view of the above discussion, we hold that the activity undertaken by the Appellant would not fall under the category of ‘cleaning service’ as defined in Section 65(24b) of the Finance Act, 1994. Accordingly, we set aside the impugned order and allow the appeal filed by the Appellant with consequential relief, if any, as per law.
(Dictated and pronounced in the open Court)
