Railway sanitation and housekeeping services qualified for exemption, while repeat demands could not rely on alleged suppression.

Cleaning of railway stations and mechanised coaches was not taxable as cleaning service before 1 July 2012 because Indian Railways was not a commercial concern and railway coaches were not covered commercial or industrial premises or assets; the service was exempt thereafter as sanitation, conservancy and public-health activity. On-board housekeeping, including cleaning, disinfection and bedroll distribution, qualified for the Government-service exemption after 1 July 2012. For the earlier period, extended limitation could not apply because the Department already knew the relevant facts from an earlier notice, so suppression could not be alleged. Amounts connected with payment disputes were not retained service tax, and no unpaid tax collection was established. All demands, interest and penalties were set aside.

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Issues: (i) Whether cleaning of railway stations and mechanised railway coaches was taxable as cleaning service before 1 July 2012 and exempt thereafter; (ii) Whether on-board housekeeping services supplied to Indian Railways were taxable as business auxiliary service; (iii) Whether the extended period could be invoked for pre-1 July 2012 on-board housekeeping services; (iv) Whether the alleged amount collected from Railways represented unpaid service tax.

Issue (i): Whether cleaning of railway stations and mechanised railway coaches was taxable as cleaning service before 1 July 2012 and exempt thereafter.

Analysis: Cleaning activity under Section 65(24b) covered cleaning of commercial or industrial buildings, premises, and specified assets. Indian Railways was not a commercial concern for this purpose, and railway coaches, being rolling stock used for public transportation, could not be treated as commercial or industrial premises or assets covered by the taxing entry. From 1 July 2012, the services provided to Indian Railways were activities concerning public health, sanitation conservancy and solid-waste management, falling within Entry No. 25 of Notification No. 25/2012-S.T.

Conclusion: The cleaning-service demand was unsustainable for the period before 1 July 2012 and exempt for the subsequent period, in favour of the assessee.

Issue (ii): Whether on-board housekeeping services supplied to Indian Railways were taxable as business auxiliary service.

Analysis: The post-1 July 2012 on-board housekeeping activities, including cleaning, disinfection and bedroll distribution, were services to Government in relation to sanitation conservancy and public health and qualified for exemption under Entry No. 25 of Notification No. 25/2012-S.T.

Conclusion: The business auxiliary service demand for the period from 1 July 2012 was unsustainable, in favour of the assessee.

Issue (iii): Whether the extended period could be invoked for pre-1 July 2012 on-board housekeeping services.

Analysis: The Department had previously issued a show-cause notice concerning the same services and was aware of the assessee's activities. The same facts could not subsequently constitute suppression, notwithstanding a different proposed classification. The extended limitation period was therefore unavailable.

Conclusion: The pre-1 July 2012 demand raised by invoking the extended period was time-barred, in favour of the assessee.

Issue (iv): Whether the alleged amount collected from Railways represented unpaid service tax.

Analysis: Documentary material established that the amount referred to was returned or settled in connection with payment disputes and did not represent service tax collected and retained. The record also showed payment of service tax actually collected and no evidence of any retained unpaid tax.

Conclusion: The allegation of collection and retention of unpaid service tax was rejected, in favour of the assessee.

Final Conclusion: All service-tax demands, interest and penalties were set aside, and consequential relief follows in accordance with law.

Ratio Decidendi: A repeat demand based on facts already known to the Department cannot invoke the extended limitation period on an allegation of suppression; services to Indian Railways relating to sanitation and public health qualify for the applicable Government-service exemption.

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