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CLEANING ACTIVITY – TAX LIABILITY IS WITH REFERENCE TO BUILDING/ PREMISES

Service Tax - By: - Mr. M. GOVINDARAJAN - Dated:- 17-8-2017 - Section 65 (24b) of Finance Act, 1994 defines the expression cleaning activity; as cleaning, including specialized cleaning services such as disinfecting, exterminating or sterilizing of objects or premises, of- Commercial or industrial buildings and premises thereof; or factory, plant or machinery , tank or reservoir of such commercial or industrial buildings and premises thereof, but does not include such services in relation to agr .....

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law. In Mukesh Kalway V. Commissioner of Central Excise, Bhopal - 2017 (3) TMI 615 - CESTAT NEW DELHI the appellants are engaged in providing mechanized cleaning service for railways, diesel locomotives, railway station premises, general manager s office, Airport Authority of Indian and certain colleges and schools. Proceedings were initiated against the appellant to demand service tax under the category of cleaning service rendered to various clients for the period from July 2015 to March 2010. .....

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common understanding, railways is not to be considered as a commercial venture with intention to earn profit; Railway is a public utility organization and as such cleaning of railway station, railway shed or office premises of the general manager cannot be considered as cleaning of commercial premises; Cleaning of an ordinance factory is involved in non commercial activity of producing arms for the defence forces.The said activity is part of sovereign function of the State and as such not liabl .....

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eceived from the Department.Therefore there was no suppression of fact and as such the extended period could not be revoked in this case.On this reason the penalties imposed on the appellants are also liable to be set aside. The Department put forth the following arguments before the Tribunal- Railways, though run by the Central Government, is a commercial organization; Railways are managing their finance independently and the operations including staff management are fully sourced by the Revenu .....

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does not give any right to claim exemption; Ordinance factory are undoubtedly factories which are industrial premises and are covered for service tax liability; Regarding cleaning of college and school premises the appellants failed to produce evidence regarding the nature of organization/premises before the Original Authority. The Tribunal heard both sides. The Tribunal analyzed the provisions of Section 65(24b) of the Finance Act, 1994. The Tribunal noted that the tax liability in respect of c .....

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held that the case is not with the service tax liability for the services provided by railways but only with the appellant, who is a private party rendering taxable services to railways. The Tribunal held that being a public utility by itself does not provide for immunity from service tax levy. It is apparent that the railways or airport authority are being subjected to service tax under various categories like transport of passengers, freight , advertising etc., However exemptions are selectiv .....

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mercial development of land and airspace in and around the stations. Having examined the scope of the activities of railways and the premises of railway stations the Tribunal was of the opinion that the activities carried out by the appellant relating to mechanical cleaning of station, rail wagon, railway office is covered by the taxable under cleaning activity. In respect of ordinance factory the Tribunal noted that the definition covers industrial building and premises thereof. Ordinance facto .....

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