InService Tax Appeal No.2638 Of 2012 -CESTAT- CESTAT (Chandigarh) rules ‘Ash Transportation’ activities by Kumar Builders not classified as 'Cleaning Services',dismisses Service Tax demand
MembersS.S. Garg (Judicial) & P. Anjani Kumar (Technical) [31-07-2023]

Read Order: Kumar Builders v. The Commissioner of Central Excise & Service Tax, Chandigarh-II

Chahat Varma

New Delhi, August8, 2023: The Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal has ruled that the demand for service tax from Kumar Builders (appellants) under the category of 'Cleaning Service' was not justified. The Tribunal held that the activities undertaken by the appellants, which primarily consisted of transporting ash from one area of the factory to another designated area, fell outside the scope of the definition of 'Cleaning Services' as outlined in Section 65(105) (zzzd) of the Finance Act.

In the cast at hand, the appellants provided services to M/s National Fertilizers Limited, Northern Railways, and M/s Ambuja Cement Limited. An investigation by the Preventive Branch of Central Excise revealed that the appellants had rendered services falling under categories like ‘Cleaning Activity’, ‘Maintenance or Repair’, ‘Management, Maintenance or Repair’, ‘Construction of Complex’, and ‘Commercial or Industrial Construction’, yet had not paid the applicable service tax.

The Tribunal noted that regarding the demand for ‘Cleaning Service’, the appellants had essentially transported ash from one area of the factory to another designated area. The Tribunal observed that the definition of ‘Cleaning Services’ under Section 65(105) (zzzd) did not encompass transportation activities, as undertaken by the appellant. Also, the evidence presented did not indicate that the appellant was engaged in cleaning the premises. Therefore, the demand for service tax under the category of ‘Cleaning Service’ was deemed unjustified.

The Tribunal further observed that if they analysed the appellant's activity as involving the repair of roads and buildings, it would fall under the classification of ‘Commercial or Industrial Construction’. Consequently, a show-cause notice issued under the label of ‘Management, Maintenance or Repair Service’ would not be valid. On the other hand, if the activity was viewed as road repair, it was exempted. In both scenarios, the demand under this specific category should be dismissed.

The Tribunal also remarked that it was the responsibility of the Department to provide substantial evidence to support their claims of the appellant rendering taxable services. Merely pointing out the absence of proof on the part of the appellant was not a valid basis for the Department's argument. In this case, the Department failed to demonstrate whether the complexes constructed by the appellant met the criteria of a ‘Residential Complex’. Thus, without such evidence, the allegation of the appellants constructing residential complexes lacked legal and factual merit.

Based on these observations, the Tribunal allowed the appellants' appeal, ruling in their favour.