No Service Tax leviable on the cleaning services provided to non-commercial building or premises

[CA Bimal Jain]

The CESTAT, Ahmedabad in the matter of SSB FACILITY MANAGEMENT SERVICE PVT LTD VERSUS C.C.E. & S.T. -SURAT-I [2022 (6) TMI 583 - CESTAT AHMEDABAD] set aside the Ex-parte order passed by the Revenue Department confirming the demand of Service tax along with interest and penalty on the cleaning services in respect of non-commercial building or premises. Held that, the demand of Service tax on such supply is not leviable as it is exempted from the levy of Service tax. Further, remanded back the matter to the Revenue Department for passing a fresh order.

Facts:

A search was carried out by the officers of Central Excise & Service tax (“the Respondent”) at the premises of M/s SSB Facility Management Services Pvt. Ltd. (“the Appellant”). During the search it was found that, The Appellant had not been paying any Service tax on the supply of cleaning services and on cost of the materials supplied to the service receivers. Moreover, no VAT was being charged in the bills raised to the Service receivers.

Accordingly, summons was issued to the Appellants to produce the documents and to give statement against the allegations and findings of the Respondent. However, the Appellant failed to respond to the summons. Thus, on the basis of available seized records and details available, Service tax liability was calculated and a Show Cause Notice (“SCN”) was issued to the Appellant proposing service tax demand of INR 1,01,15,634/- along with interest and penalty. Consequently, an Ex-parte order (“the Impugned Order”) was passed confirming the Service tax on account of non-furnishing of defence reply by the Appellant.

Being aggrieved by the Impugned Order, the Appellant had filed this appeal.

Issue:

Whether Service tax is leviable on supply of cleaning services?

Held:

The CESTAT, Ahmedabad in SSB FACILITY MANAGEMENT SERVICE PVT LTD VERSUS C.C.E. & S.T. -SURAT-I [2022 (6) TMI 583 - CESTAT AHMEDABAD]  held as under:

• Noted that, that cleaning service in respect of non-commercial building and premises thereof would not be covered within the purview of service tax under this category.” Further, the services provided in relation to the authorized operations in a Special Economic Zone (“SEZ”), and received by a developer or units of a SEZ, are exempt from the levy of Service tax as per the Notification No. 9/2009-Service Tax dated March 03, 2009 and Notification No. 12/2003- Service Tax dated June 20, 2003 (“the Exemption Notifications”)
• Observed that, the Respondent has gravely erred in not allowing the exemption and deduction claimed while arriving at final taxable value whereas, cleaning activities in respect of non-commercial building or premises are not taxable.
• Set aside the Impugned Order.
• Held that, service tax cannot be levied on the value of material supplied by the Appellant in view of the Exemption Notifications.
• Granted opportunity to the Appellant to produce their claims and defence along with the supporting documents related to exemptions and deductions.
• Remanded the matter to the Respondent for passing a fresh order.

(Author can be reached at info@a2ztaxcorp.com)