TaxTMI 
TaxTMI 
2026 (7) TMI 1001
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....artment and have been collecting and depositing service tax so collected by them in the cases Railways had mentioned the same in their contracts and paid the same to the Appellant. Regarding the levy of service tax on the services rendered to Indian Railways, there were some apparent confusion which prevailed amongst different railway divisions/zones and the same was also clear from the contracts entered into by the different zones. Owing to such confusion in the relevant contracts where there was mention of service tax, the Appellant had raised bills with service tax and paid the service tax so collected to the government exchequer but in other cases where there was no mention of levy of service tax in the respective contracts, the Appellant did not raise any service tax bill to the respective Divisions/Zones of the Railways. 1.2. Based on the records regarding identical service provided by the Appellant to Indian Railways, the Department had first issued one SCN vide C No. V(12)49-CEP/2011/3168 dated 11.10.2012 for the period 2007-08 to 2011-12 demanding service tax of Rs. 28,04,724/- under the category of 'cleaning service' and such demand though confirmed by the lower author....
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....office, toilets, tracks, etc and ii) mechanised coach cleaning - involving exterior and interior cleaning/disinfection of stationary trains at its termination point fall under the category of cleaning service under Section 65(24b) of the Finance Act, 1994 and is chargeable to service tax. (b) The activities regarding On Board Housekeeping Service involving cleaning and disinfection of toilets, bedroll distribution etc are covered under the category 'Business Auxiliary Service' under Section 65(19) of the Finance Act, 1994 and as such is chargeable to service tax. 1.6. Being aggrieved by the Order-in-Original dated 25.04.2018, the Appellant has filed the instant appeal. 2. The submissions made by the Appellant are summarized as under: On service tax demand of Rs. 84,67,726/- under the category of Cleaning Service It is the submission of the Appellant that identical issue has already been decided and settled in favour of the appellant by this Tribunal in the case of M/s. Bindhya Bashini Traders v Commissioner of C.G.S.T. and Central Excise vide Final Order No. 75320/2025 dated 12.02.2025 wherein it has been decided that for the period upto 01....
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....ain on the very same issue to demand service tax for the subsequent period. Accordingly, the Appellant submits that the demand confirmed in the impugned order for the period prior to 01.07.2012, by invoking the extended period of limitation is not sustainable. 3. The Ld. A.R. reiterated the findings in the impugned order. He further submits that in the SCN vide C No. V(12)49-CEP/2011/3168 dated 11.10.2012, the demand has been raised under the category of 'Cleaning Services', whereas the demand in the present case has been raised under the category of 'Business Auxiliary Services'. Accordingly, he submits that the ratio of the decision in the case of Nizam Sugars is not applicable to the facts of the present case. Accordingly, he justified the demands confirmed in the impugned order. 3.1. The Ld. A.R. further submitted that as recorded in para 22 of the impugned order, an amount of Rs.87,07,264/- has been collected by the Appellant from Railways and hence, the Appellant is liable to pay the service tax collected from Railways to the Exchequer. 4. Heard both sides and perused the appeal documents. 5. Regarding the demand of service tax of Rs. 84,67,726/- under the categor....
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....ndustrial buildings and premises thereof, but does not include such services in relation to agriculture, horticulture, animal husbandry or dairying;" 7.2. From the definition as reproduced above, it is observed that the 'cleaning activity' rendered is liable to Service Tax only if the same are rendered in respect of "commercial or industrial buildings and premises" or "factory, plant or machinery, tank or reservoir of such commercial or industrial buildings and premises" which are all commercial in nature. However, we find that in this case, the services were rendered by the appellant to the Indian Railways, which is a Government of India Organisation. The Department of Railways cannot be called as a 'commercial concern' as its operations of passenger transportation of passengers in trains is meant for the welfare of the general public and it cannot be considered as an activity done with a profit motive. In these circumstances, we hold that the cleaning services rendered by the appellant cannot be held liable to Service Tax for the period up to 30.06.2012. We find that this view is supported by the decision of the Tribunal in the case of R.K. Refre....
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....services' .......... (b) Cleaning of toilets and compartments : It is the case of the Revenue that these services are chargeable to service tax under the head 'cleaning services' under Section 65(24b) read with Section 65(105)(zzzd) of the Finance Act, 1994 while it is the case of the assessee appellant that these services are not covered by the definition of 'cleaning services' as they have not been rendering any such services in the commercial premises but are rendering the same on the trains. Section 65(24b) reads as follows: The "cleaning activity" is defined as cleaning, including, specialized cleaning services, such as, disinfecting, ex-terminating or sterilizing of objects or premises of (i) Commercial or industrial building and premises thereof; or (ii) factory, plant or machinery, tank or reservoir of such commercial or industrial buildings and premises thereof, but does not include such services in relation to agriculture, horticulture, animal husbandry or dairying. It is clear that cleaning is with reference to objects or premises of commercial or industrial building, factory and premises thereof. The question is whet....
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....ity of the exemption as provided under Entry No. 25 of Notification No. 25/2012-S.T. dated 20.06.2012, it is required to examine the relevant provisions of the said Notification, which is extracted below: - "25. Services provided to Government, a local authority or a governmental authority by way of - (a) carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation; or (b) repair or maintenance of a vessel or an aircraft;" 8.3......From the extract reproduced in para 8.2. supra, we find that the services provided to the Government which are in the nature of services ordinarily rendered by a municipality such as water supply, public health, sanitation conservancy and solid waste management are, inter alia, are exempted from Service Tax by virtue of the above said Notification. In this case, there is no dispute that the appellant has rendered the services namely, 'upkeep/maintenance of platforms', 'dry sweeping of empty rakes and mechanized yard cleaning', 'railway platform cleaning', 'dispos....
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.... the period 2007-08 to 2011-12 wherein service tax was charged by the department under the head of 'Cleaning Service' on the same category of services provided by the Appellant to the Indian Railways. The said issue has been finally decided in favour of the Appellant by CESTAT, Kolkata vide Final Order No. 77498/2025 dated 26.09.2025. Thus, we find that the department is well aware of the activities undertaken by the Appellant and no suppression of fact can be attributed on the part of the Appellant. Thus, we observe that while issuing the instant SCN dated 14.10.2014 for the FY 2009-10 to 2013-14 based on the same set of facts, charge of suppression cannot be attributed on the part of the Appellant. In this regard, we rely on the decision of the Hon'ble Supreme Court in the case of Nizam Sugar Factory v Collector of Central Excise, A.P. [2008 (9) S.T.R. 314 (S.C.)] wherein at Para 9, it has been observed as under:- When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these....
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....us, we do not find any merit in the submission of the Ld. A.R that the Appellant has collected the service tax and retained the same. Further, we find that the Appellant has paid the service tax collected by them from Railways and filed ST-3 returns. There is no other evidence available on record to show that the Appellant has retained the amount of service tax collected from Railways and not paid the same to the Exchequer. Accordingly, we reject the allegation as there is no evidence available on record to substantiate the same. 9. In the result, we set aside the impugned order and allow the appeal filed by the Appellant with consequential relief, if any, as per law. (Order Pronounced in Open court on 16.07.2026) ============= Document 1 06.06.2013 gd W.P. 24493 (W) of 2012 M/S. Khagaul Loco Labour's Co-operative Society Limited & Anr. Vs. Union of India & Ors. Mr. Joydeep Kar Mr. Joydeep Roy .. for the Petitioners Mr. Swapan Banerjee .. for Respondents The grievance of the petitioners is that an exorbitant amount in excess of Rs.1.5 crore has been arbitrarily withheld from the petitioners' bills raised on the railways for the petitioners ren....