Kumar Builders Vs Commissioner of Central Excise & Service Tax (CESTAT Chandigarh)
CESTAT Chandigarh held that activity of transportation and disposal of ash cannot be classified under taxable category of ‘Cleaning Services’. Accordingly, demand of service tax unsustainable.
Facts- Investigation by the Preventive Branch of Central Excise revealed that the appellants have provided services under the category of “Cleaning Activity”, “Maintenance or Repair”, “Management, Maintenance or Repair”, “Construction of Complex” and “Commercial or Industrial Construction” etc. and have not paid applicable service tax.
A show-cause notice was issued to the appellants and was confirmed by the Adjudicating Authority vide impugned order. CESTAT vide Final Order No.57531/2013 dated 02.09.2013 rejected the appeal filed by the appellant for non-payment of pre-deposit; on an appeal filed by the appellant, Punjab & Haryana High Court vide Order dated 04.03.2015 dismissed the order of the Tribunal and directed the Tribunal to hear the appeal without payment of pre-deposit, of duty confirmed on the “Cleaning Service”, while directing the appellants to pre-deposit the amounts in respect of “Management, Maintenance and Repair”; CESTAT restored the appeal which is before us.
Conclusion- Kolkata Bench of Tribunal in the case of Calcutta Industrial Supply Corporation has held that 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.
Held that the activity undertaken by the appellants is of transportation and disposal of ash rather than cleaning of the premises as envisaged under the definition cited above. Therefore, we find that the contentions of the appellant are acceptable and therefore, the demand of service tax on this count is liable to be set aside.
Held that the appellants have undertaken mostly the repair of roads which is exempted by Section 97 as well as by Notification No.24/2009. If we consider the activity of the appellant as repair of roads and buildings, it gets categorized under “Commercial or Industrial Construction” and therefore, a show-cause notice issued under the “Management, Maintenance or Repair Service” cannot be sustained. On the other hand, if the activity is considered as repair of road, the same stands exempted. Either way the demand under this Head is liable to be set aside.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
1. M/s Kumar Builders, the appellants, having got registered, provided certain services to M/s National Fertilizers Limited, Northern Railways and M/s Ambuja Cement Limited; investigation by the Preventive Branch of Central Excise revealed that the appellants have provided services under the category of “Cleaning Activity”, “Maintenance or Repair”, “Management, Maintenance or Repair”, “Construction of Complex” and “Commercial or Industrial Construction” etc. and have not paid applicable service tax. A show-cause notice dated 24.01.2011 was issued to the appellants and was confirmed by the Adjudicating Authority vide impugned order dated 16.01.2012. CESTAT vide Final Order No.57531/2013 dated 02.09.2013 rejected the appeal filed by the appellant for non-payment of pre-deposit; on an appeal filed by the appellant, Punjab & Haryana High Court vide Order dated 04.03.2015 dismissed the order of the Tribunal and directed the Tribunal to hear the appeal without payment of pre-deposit, of duty confirmed on the “Cleaning Service”, while directing the appellants to pre-deposit the amounts in respect of “Management, Maintenance and Repair”; CESTAT vide Order dated 06.11.20 15 restored the appeal which is before us.
2. Shri G.S. Sandhe, learned Counsel appearing for the appellant submits that the demand raised is under four categories i.e. Cleaning Service (Rs.29,60,791/-); Maintenance or Repair/ Management, Maintenance or Repair Service (Rs.21,94,110/-); Construction of Complex Service (Rs.21,49,623 + Rs.1,34,681/-) and Industrial or Commercial Construction Service (Rs.49,191/-).
3. Coming to the first demand on “Cleaning Service”, the appellants submit that it is clear from the work order that the activity undertaken by the appellants is loading of ash in trucks/ Dumpers from the ash pond and transporting/ dumping/ stacking the same in the peripheral area provided by National Fertilizers Limited; the activity also included levelling and sprinkling water on the ash dumped; this activity will not fall under “Cleaning Services” as defined under Section 65(105)(zzzd). He further submits that the very same issue is decided in favour of the appellants by the Tribunal in the case of Calcutta Industrial Supply Corporation- 2019 (31) GSTL 487 (Tri. Kolkata); in additionthe service rendered cannot be treated as Cleaning Service even as per CBEC Circular No. B1/6/2005-TRU dated 27.07.2005.
4. On the demand of service tax on the alleged “Management, Maintenance or Repair Service”, learned Counsel submits that a perusal of the work orders and contracts reveal that the activity undertaken was repair of roads at Bathinda (NFL); Section 97 granted exemption to the repair of roads from the period 16th June, 2005 to 26th July, 2009, retrospectively and with effect from 27.07.2009, Notification No.24/2009-ST dated 27.07.2009 provides exemption to repair of roads.
4.1. Learned Counsel further submits that the contract agreement would reveal that the work involved was petty civil jobs in factory and township during the relevant period; learned Adjudicating Authority erred in holding that tax liability has to be examined in the light of definitions under the Act and not as per the contract; the nature of the service can only be ascertained from the terms of the contract and the actual work undertaken; the work they have undertaken was repair by way of petty civil works, like construction of wall, parking sheds etc., in the plant and township of M/s NFL; the job involved use of material also; cement was provided by M/s NFL and Sales Tax was paid on the same; the activity cannot be covered under Maintenance or Repair but can be covered under “Construction Of Complex” in the township and under “Commercial or Industrial Construction” in the Plant area; it can be seen from the definitions of “Commercial or Industrial Construction” [Section 65 (25b)] and “Construction of Complex” [Section 65 (30a)] which include repair, alteration, renovation or restoration; learned Counsel submits that the construction being for self-use by M/s NFL does not attract service tax. He submits that since the Department has raised the demand on “Management-Maintenance or Repair”, the same cannot be sustained.
5. On the issue of “Construction of Complex Service”, learned Counsel submits that the construction undertaken, of 36 units Type-I S/S Quarters (Ganghut) (10 at Rampura Phul, 8 at Atal, 10, at Barmala and 8 at Kilanwali stations) and other allied works, by the appellants for Northern Railway does not fall under this category as the work order clearly specified the number of residential units being less than twelve and not part of any complex.
5.1. On the construction under for M/s Ambuja Cement, learned Counsel submits that the work order dated 01.01.2008 mentions construction of 80 Units, Type-I (D/S Qtr. Replacement of condemned qtrs. Block No.111 (12 units), Block No.300 (3 Units), Block No. 285 (8 units), Block No.268 (19 units), Block 269 (19 units) & Block No.270 (19 units) in colony No.1 & $ at Firozpur under ADEN/I-FZR of Railways. He submits that as these units are not more than 20 at a place and have been got constructed by M/s Ambuja Cements for their personal use, no service tax can be levied as held in Khurana Engineering Works- 2011 (21) STR 115 (Tri. Ahm.) and as per Departmental clarification F.No. B 1/6/2005-TRU dated 27.07.2005.
6. Regarding the demand of service tax of Rs.49,191/- for the construction of pump house for hydrant system at Bathinda unit of M/s Ambuja Cements, he submits that demand is not sustainable as the system is erected as per the requirements of Factory Act; moreover, as the other demands are not sustainable, even if this amount is held to be payable, the appellant will be exempted under Notification No. 06/2005-ST dated 01.03.2005 for small-scale service
7. Learned Counsel for the appellants submits that extended period cannot be invoked in the case due to the facts and circumstances of the case; it is on record that the appellant has undertaken the work for Government Undertakings or Limited Companies; the appellant has not suppressed any information from the Department; the appellant was under bona fide belief that his activity is not chargeable to service tax; the issue involved is about interpretation of the scope of service tax and various judgments have been delivered in this regard; the appellants have bona fide reasons to have a different opinion that the services are not taxable; as held in the following cases, extended period cannot be invoked:
