Appeals Allowed: Service Tax Demand Set Aside as Time-Barred; Cleaning Services Exempt Under Notification

The Tribunal allowed the appeals filed by the appellants, setting aside the demand of service tax as it was barred by limitation. It was determined that the cleaning services provided were exempt under Notification No. 25/2012-ST. The order was pronounced on 28/03/2022.

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Issues Involved:
1. Demand of service tax along with interest and penalties.
2. Applicability of extended period of limitation.
3. Classification of services provided by the appellant.
4. Examination of agreements and invoices.
5. Previous audit findings and their relevance.
6. Exemption under Notification No. 25/2012-ST.
7. Allegations of suppression of facts.

Detailed Analysis:

1. Demand of Service Tax Along with Interest and Penalties:
The appellant was issued a show cause notice demanding service tax amounting to Rs. 2,84,72,839/- along with interest and various penalties. The demand was based on the classification of services provided by the appellant, which included cleaning services and manpower supply services. The appellant argued that cleaning services provided to non-commercial organizations, government hospitals, and educational institutes were not taxable, and they had already paid service tax on manpower supply services.

2. Applicability of Extended Period of Limitation:
The appellant contended that the demand was barred by limitation as the department was already aware of their activities from previous audits and proceedings. Citing the Supreme Court's decision in Nizam Sugar Factory vs. Collector of Central Excise, the appellant argued that the extended period of limitation could not be invoked since the facts were already known to the department. The Tribunal agreed with this contention, holding that the demand was barred by limitation.

3. Classification of Services Provided by the Appellant:
The Tribunal examined various agreements and invoices to determine the nature of services provided. Agreements with the Medical University, Greater Noida, and Super Specialty Pediatric Hospital & Post Graduate Teaching Institute, Noida, indicated that the appellant provided cleaning and sanitation services. The appellant also provided manpower services to hospitals, for which they charged and paid service tax.

4. Examination of Agreements and Invoices:
The Tribunal scrutinized the agreements and invoices to ascertain the exact nature of activities. It was found that the appellant had correctly classified and paid service tax on manpower supply services, while cleaning services provided to non-commercial entities were not taxable. The Tribunal criticized the department for not examining these documents before issuing the show cause notice.

5. Previous Audit Findings and Their Relevance:
The Tribunal noted that an earlier audit had been conducted for the period 2009-2010 to 2012-2013, and a demand was raised based on the gross value of services without considering exemptions. The Tribunal held that the department's knowledge from previous audits precluded the invocation of the extended period of limitation for subsequent demands.

6. Exemption Under Notification No. 25/2012-ST:
The Tribunal held that cleaning services provided to government entities were exempt under Notification No. 25/2012-ST, which exempts services related to public health, sanitation, and solid waste management provided to government or local authorities. The appellant's cleaning services fell under this exemption, making them non-taxable.

7. Allegations of Suppression of Facts:
The Tribunal found no merit in the department's allegation of suppression of facts. It was established that the appellant had disclosed all relevant information in their balance sheets and ST-3 returns. The Tribunal reiterated that once the department had knowledge of the facts, subsequent show cause notices could not allege suppression for invoking the extended period of limitation.

Conclusion:
The Tribunal set aside the impugned order, holding that the demand of service tax was barred by limitation and that cleaning services provided by the appellant were exempt under Notification No. 25/2012-ST. The appeals filed by the appellants were allowed, and the order was pronounced in open court on 28/03/2022.

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