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The CESTAT, Chandigarh, in M/s Kumar Builders v. Commissioner of Central Excise & Service Tax [Service Tax Appeal No.2638 of 2012 dated July 31, 2023] set aside the demand order and held that transportation of ash to disposal area would not equate to cleaning services, it is mere transportation and disposal of ash, which falls outside the ambit of definition of cleaning services.


M/s. Kumar Builders (“the Appellant”) entered into a contract with companies viz. M/s National Fertilizers Limited, M/s Ambuja Cement Limited etc. for transportation ash from factory premise to dumping area.

A Show Cause Notice dated January 24, 2011 was issued by the Revenue Department (“the Respondent”) inter alia demanding service tax on the transportation of ash by categorizing such services under cleaning activity. The Adjudicating Authority vide an order dated January 16, 2012 (“the Impugned Order”) imposed the demand of the service tax.

Aggrieved by the Impugned order, the Appellant filed an appeal before the CESTAT, Chandigarh.

The Appellant submitted that the activity undertaken by them is of loading of ash in trucks/dumpers from the ash pond and transporting and dumping the same in the peripheral area provided by customer.

The Appellant relied upon the judgment of CESTAT, Kolkata in Calcutta Industrial Supply Corporation v Commissioner of Service tax [2019 (31) GSTL 487 (Tri. Kolkata)] wherein it was held that the assessee was engaged for transportation and disposal of ash, in the abandoned mines which does not show that the assessee was engaged for cleaning of the premises. Therefore, the demand of service tax under the category of Cleaning Service is not justified.

Further relied on the CBEC’s Circular No. B1/6/2005-TRU dated July 27, 2005 which defines the term ‘cleaning services’ which inter alia covers specialized cleaning services such as disinfecting, extermination or sterilizing of objects or premises, commercial or industrial buildings and premises thereof, factory, plant or machinery, tank or reservoir of such commercial or industrial buildings and premises thereof.


Whether the transportation of ash from factory to disposal area falls under the cleaning services and thereby attracts service tax?


The CESTAT, Chandigarh in Service Tax Appeal No.2638 Of 2012 held as under:

  • Observed that, the Appellant have simply transported the ash from one premises of the factory and dumped the same in other premises designated for the same.
  • Further observed that, the “Cleaning Services” under Section 65(105)(zzzd) of the Finance Act, 1994 it can be understood that transportation as is done by the Appellant is not covered by the definition.
  • Relied upon the case of Calcutta Industrial Supply Corporation as relied upon by the Appellant wherein the CESTAT, Kolkata held that transportation and disposal of ash, in abandoned mines does not make the service fall under cleaning services.
  • Held that, the Appellant is engaged in transportation and disposal of ash rather than cleaning of the premises therefore, the demand of service tax is liable to be set aside.

Conclusion: CESTAT Chandigarh ruled in favor of M/s Kumar Builders, emphasizing that the activity of transporting and disposing of ash does not qualify as cleaning services under the scope of the law. The tribunal noted that the transportation undertaken by the appellant was distinct from cleaning services, as defined in the relevant law. This judgment brings clarity to the classification of such activities for taxation purposes. It underscores the importance of accurate categorization in the taxation of service activities, providing valuable insights for future cases and clarifications.


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May 2024