cleaning activity service

[RAJESH MANGAL AGRAWAL]

Dear sir, Pl share your expert opinion on the following question. Whether services provided to railways for cleaning of platform,FOBs,urinal, Lavatories,waiting Halls, Waiting Rooms,Dormitories,rag picking on all tracks,disposal of garbage falls under 'CLEANING ACTIVITY SERVICE' AND a taxable service in the hand of the service provider ????? To my opinion the above services do not fall under Cleaning activity service. Railway is not a commercial or Industrial organisation and if the above service falls under the'CLEANING ACTIVITY SERVICE' then also it is not taxable.pl share your expert opinion.

[Sucheta Agrawal]

Dear Mr. Rajesh,

In my views railway is a commercial organisation. As the word "commerce" defined as "the exchange of something of value between two entities." Thus the railway definetly fall in the nature of commerce. The services provided to the railway will be taxable as no specific exemption has been provided to it.

Thanks & Regards

Sucheta Agrawal (ACS)  

[DEV KUMAR KOTHARI]

Ref: Services rendered to Indian Railways or other government departments - issue as well as personal message:

1.This is with reference to observations of learned readers including Mr. Datey and Mr. Govindrajan and Sucheta Agarwal. It has been rightly pointed out by them that Railways is a commercial establishment. No doubt the Indian Railways is one of biggest commercial establishment and  by nature of services most of them maybe taxable. 2. Indian Railways  it is a part and parcel of GOI. It is under the Ministry of Railways, GOI. Thus it is not a person for the purpose of service tax. The General Clauses Act vide Section 3(42) reads   "person" shall include any company or association or body of individuals, whether incorporated or not;.".  Though it is an inclusive definition, but government cannot be considered as a 'person', particularly when a tax is imposed by the same government.From FAQ on service tax:Q.10 How do you describe the expression, "person" appearing in the definitions of taxable service? Ans. The expression refers to a 'legal person' and would include any individual, proprietary firm or partnership firm, company, trust and institution and society etc. Here also GOI is not included in 'person'. Levy of service tax on government as a service receiver will be of no avail for the GOI- on one hand ST will be collected by service provider from Indian Railways, GOI and on other hand it will be paid to GOI. So even with purpose seeking approach, there cannot be levy of ST on Railways on services availed by IR, GOI. Though levy of ST is on service provider, however, it is admitted position that ST is charged extra as may be applicable in relation to service provided to service receiver. Even in tenders of Railways, there is specific mention that any tax , duty etc. will be extra as may be applicable at the relevant time.

BSNL may be a 100% government company, but it is a company and not government,  hence a 'person' liable to pay even income tax, VAT and service tax. In my earlier reply I have stated that "  …, if service is provided to any government company, or contractor of Railways then matter would be different. Let us brain storm on the issue.

AI Summary

Taxability of cleaning services hinges on whether the service receiver is a government entity or a taxable 'person'. Whether cleaning services to the railways are taxable under Cleaning Activity Service is contested: one position treats the railways as a commercial entity making such services taxable and recoverable by providers under tender terms; the opposing position argues Indian Railways is part of the government and not a 'person' for service tax purposes, so levy on services received by the government is effectively ineffectual, while government-owned companies remain taxable entities.