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.
