2017 (3) TMI 615

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....d. Counsel for the appellant contested the impugned order on the following grounds: (a) The original authority considered the entire case after examining the status of the service recipient and not the status of building / premises involved in cleaning activity. It is submitted that the statutory definition of 'cleaning activity' will cover only 'commercial or industrial building and premises'. It is not the status of the owner of the building but the status of the building or premises which matters. (b) The word 'commercial' has not been defined in the Finance Act, 1994. Relying on the dictionary meanings as well as common understanding, it is submitted that railways is not to be considered as a commercial venture with an intention to earn profit. (c) It 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. (d) Cleaning of an ordnance factory will not be liable to service tax. The said factory is involved in non commercial activity of producing arms for the defense forces. The said activity is part of sovereign func....

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....ght to claim exemption. Regarding ordnance factory, the Ld. AR submitted that these 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. 4. We have heard both the sides and perused the records.   5. The appellant are contested their service tax under 'cleaning activity'. Statutory provisions relevant are as below: "Finance Act, 1994 Section 65. Definitions. - in this Chapter, unless the context otherwise requires, - (105) "taxable service" means any service provided or to be provided, - (zzzd) to any person, by any other person, in relation to cleaning activity; ............ (24b) "cleaning activity" means cleaning, including specialized cleaning services such as disinfecting, exterminating or sterilizing of objects or premises, of- (i) Commercial or industrial buildings and premises thereof; or (ii) (ii) factory, plant or machinery, tank or reservoir of such commercial or industrial buildings and premises thereof, but does not....

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....y is not a commercial venture. In Dr. P. Nalla thampi Thera vs. UOI (1984) AIR SC 74, the Hon'ble Supreme Court was examining the facts as existing in 1983, it was mentioned that railways are a public utility service run on a monopoly basis. Since, it is a public utility, there is no justification to run it merely as a commercial venture with a view to make profit. The Hon'ble Supreme Court was examining the prayer of the appellant for provision of certain services as part of bounden duty of the Government. In Andhra Pradesh State Road Transport Corporation (1986) 52 CTR (SC) 75 case the Hon'ble Supreme Court examining the facts, as per the relevant time in 1986, held that the road transport corporation is a general public utility and the dominant purpose is not to earn profit and accordingly, the activities can be considered as charitable purpose.  The Hon'ble Supreme Court was examining the provisions of Income Tax Act, and RTC Act to decide the issue. As noted, these decisions are dealing with a set of facts and background and will not help the appellant to contest the service tax liability for the services provided to railways. We are not dealing with se....

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....the railways had advised redevelop 400 stations where the entire cost of redevelopment is to be met by leveraging commercial development of land and airspace in and around the stations (PIB press note dated 22.07.2016). Having examined the scope of activities of railways and the premises of railway stations we are 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 entry - 'cleaning activity'. It may not be out of place to mention here that in respect of tax entry 'Commercial or Industrial Construction service', services provided to railways are specifically excluded though the tax entry is with reference to commercial industrial construction service. 9. Regarding tax liability on cleaning activities under taken by the appellant in the premises of ordnance factory, we note that the definition covers industrial building and premises thereof. Ordnance factory premises are covered by industrial building. Even otherwise clause (ii) of the definition clearly mentions factory as one of the premises covered for tax liability. The factory in the present case is no....