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of <h1>Cleaning and sanitation services to government hospitals confirmed exempt under Notification No.25/2012-ST; no tax or penalties imposed.</h1> Clarifies that cleaning and sanitation services supplied to a government hospital qualify for exemption under the relevant notification, construing the ... Exemption under Notification No. 25/2012-ST - cleaning and sanitation services provided to Government Hospital - Interpretation of exemption notification - public health and sanitation conservancy - taxable service u/s 65B(51) - extended period of limitation (invocation for interpretational issue) - penalty u/s 77 and Section 78 - Notification No. 6/2014-ST - Whether the cleaning and sanitation services provided by the appellant to Government Hospital would fall under the taxable service and exempted from the service tax vide Notification No. 25/2012-ST - HELD THAT:- The Superintendent of the Government Hospital being Head of the hospital had entered into agreement on behalf of the Government with the appellant for providing such services and therefore Superintendent is empowered for such agreement. The services are eligible for tax exemption and the issue involved is interpretation of the notification benefit to the services of cleaning and sanitation provided by the appellant to Government Hospital. Thus, extended period of limitation is not invocable. There is no any fraud, collusion or wilful default or any type of suppression of facts. Therefore, question of invocation of limitation does not arise. Hon’ble Supreme Court in the case of Principal Commissioner of Customs Vs Felox Technologies India Pvt Ltd [2025 (4) TMI 1251 - SC ORDER], wherein, held that the issue of eligibility of benefit of exemption being interpretational in nature, extended period of limitation could not have been invoked for raising duty demand. There is no tax liability on merits. Since, no any tax liability therefore, imposing of penalty cannot be sustained. Therefore, we find that the impugned order cannot be sustained and appeals must be allowed and accordingly we set aside the impugned order. Issues: Whether cleaning and sanitation services provided by the appellant to Government hospitals are exempt from service tax under Notification No. 25/2012-ST dated 20.06.2012 and whether the extended period of limitation and penalties can be invoked where exemption is interpretational.Analysis: The factual matrix shows contracts for cleaning, sanitation and waste disposal entered into with a Government-run medical hospital. Section 65B(51) defines taxable services and Section 66B prescribes levy; Notification No. 25/2012-ST (as substituted by Notification No. 6/2014-ST) exempts services provided to Government, a local authority or a governmental authority by way of activities relating to water supply, public health, sanitation conservancy, solid waste management or slum improvement and up-gradation. The Court examined the scope of the agreement (cleaning of premises, toilets, drainage, disposal of normal and bio-waste) and compared it with the functions described in the exemption entry, concluding these services fall within sanitation conservancy and related activities covered by the notification. The Tribunal relied on co-ordinate bench decisions (held up by the Supreme Court) that applied the same notification to cleaning and housekeeping services provided to Government hospitals, and on authority that where the question is one of interpretation of an exemption notification, invocation of the extended period for raising demand is not appropriate in absence of fraud, suppression or wilful misstatement. Given no evidence of fraud or suppression and that the Superintendent legitimately entered the contract on behalf of the Government hospital, the extended period and penalties under the Finance Act could not be sustained. The absence of meritorious tax liability negates the imposition of penalties.Conclusion: The cleaning and sanitation services provided by the appellant to Government hospitals are exempt under Notification No. 25/2012-ST as substituted by Notification No. 6/2014-ST; extended period of limitation is not invocable for this interpretational issue and penalties cannot be sustained. Appeals allowed in favour of the assessee.
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