Custom, Excise & Service Tax Tribunal
Khagul Labour Co Operative Society Ltd vs Patna on 26 September, 2025
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
REGIONAL BENCH - COURT NO.2
Service Tax Appeal No. 76684 of 2014
(Arising out of Order-in-Appeal No. 861/Pat/S.Tax/Appeal/2014 dated 25/09/2014
passed by Commissioner (Appeals) Customs, Central Excise, Service Tax, Patna.)
M/s Khagaul Labour Co Operative Society Ltd.
(Neemtala Road, Khagaul, Patna)
Appellant
VERSUS
Commr. of Central Excise & Service Tax, Patna
(2nd Floor, Central Revenue Building,
Birchand Patel Path, Patna-800001)
Respondent
APPEARANCE:
Mr. Aditya Dutta, Advocate for the Appellant
Mr. D. Sue, Authorized Representative for the Respondent
CORAM:
HON'BLE MR. R. MURALIDHAR, MEMBER (JUDICIAL)
HON'BLE MR. K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO. 77496/2025
Date of Hearing : 24th September 2025
Date of Pronouncement : 26.09.2025
ORDER [PER R. MURALIDHAR]
The appellant is engaged in providing services of the nature of
Cleaning Service to Indian Railways viz. Cleaning and Sanitation Work
in Railway Station of Samastipur Division. Services rendered by them
have been in the category of like „Mechanised and Manual Cleaning of
Station‟, „Sanitation of Stations‟ etc. It is known from the trade
parlance that such service given to Indian Railways did not attract
service tax and more so, in the Contract signed between Eastern
Railways with the appellant, there was no clause on the aspect of
payment of service tax. The SCN dated 11.10.2012 was issued to the
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appellant for the period 2007-08 to 2011-12 proposing recovery of
service tax along with cess amounting to Rs. 27,99,070/- on the
allegation of non-payment of service tax under the head „cleaning
service‟ defined under Section 65(24b) of the Finance Act, 1994. After
due process, the lower authorities confirmed the demand. Being
aggrieved the appellant has filed the present appeal before the Tribunal.
2. The Ld Counsel, appearing for the appellant submits that the
issue is no more res integra. On an identical issue, 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 at Paragraphs 7 to 7.4 it has been squarely held that
similar/identical services provided to Indian Railways does not come
under the category of "Cleaning Service" till 01.07.2012 and the
demand for the said period has been set aside.
3. On this ground the appellant prays that the impugned order may
be set aside and appeal may be allowed.
4. The Ld AR reiterates the findings of the lower authorities to the
effect that the cleaning services were provided to Railways and
platforms thereof which come under the term „commercial or industrial
building and premises thereof‟ hence the said activities performed
comes under the terms „business‟ and hence, the appellants are liable
to pay service tax.
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5. We find that the issue, as submitted by the appellant is no more
res integra. This Bench, in the case of Bindhya Bashini Traders v
Commissioner of C.G.S.T. and Central Excise vide Final Order No.
75320/2025 dated 12.02.2025, has held as under :
7. We observe that in the instant case, the appellant has rendered services in
the nature of „upkeep/maintenance of platforms‟, „dry sweeping of empty rakes and
mechanized yard cleaning‟, „railway platform cleaning‟, „disposal of accumulated
garbage to designated placed‟, „on-board housekeeping service in reserved coaches
of Poorva Express‟ and „cleaning of Sonpur Railway Station platform and its
surrounding area‟, to the South Eastern Railways. The demand in this case has
been raised for the period from 2012-13 to 2015-16.
7.1. We find that for the period up to 30.06.2012, the Department seeks to
classify the services rendered by the appellant under the category of "cleaning
service", as defined under Section 65(105)(zzzd) read with Section 65(24b) of the
Finance Act, 1994. The said definition is reproduced below for the sake of ready
reference: -
"SECTION 65. Definitions. -- In this Chapter, unless the context
otherwise requires, -
.....
(24b) "cleaning activity" means cleaning, including specialised cleaning services such as disinfecting, exterminating or sterilising of objects or premises, of --
(i) commercial or industrial buildings 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;"
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 4 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. Refreshment & Enterprises (P) Ltd. v. Commissioner of C.Ex., Raipur [2018 (14) G.S.T.L. 281 (Tri. - Del.)], wherein it was held as under:
-
"3. We have heard both the Ld. Counsel for the appellant and the Ld. AR for the Revenue and perused the appeal record including the impugned order. We take up the disputed activities for tax liability one by one.
(i) Cleaning Services (Rs. 3,09,194/-) :
The appellants were engaged in cleaning of railway coaches and toilets in the said coaches. The original authority confirmed tax liability under cleaning service. Section 65(105)(zzzd) read with Section 65(24b) of the Finance Act, 1994 is relevant in the tax levy. The "cleaning activity" is defined as cleaning, including, specialized cleaning services, such as, disinfecting, exterminating 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 original authority gave a reason that railway coaches are either standing on platform or running on the track and the same are to be considered as object on the premises for Indian railway holding railway coaches and contracts constituents of capital assets and machinery of Indian railway, the original authority held cleaning of such railway coaches will be considered as cleaning of commercial premises. The coaches are rolling stock of railways. They are for transport mode and cannot fall under the commercial object of industrial building, factory, plant or machinery, etc. The interpretation of the original authority is far fetched and not sustainable in view of the plain meaning of the statutory definition for tax entry."
7.3. A similar view has also been taken in the decision rendered in the case of P. Siva Prasad v Commissioner of C.Ex., Cus. & S.T., Hyderabad-III [2019 (27) G.S.T.L. 233 (Tri-Hyd.)]. The relevant part of the said Order is reproduced below: -
"13. We now deal with the above issues and decide -
(a) Supply of bed rolls under the head „business auxiliary services‟ 5 ..........
(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 whether the trains in which they render these services can be considered as commercial or industrial buildings or premises or factory, plant or machinery, tank or reservoir of such commercial and industrial buildings and premises or otherwise. The Principal Bench of Tribunal at Delhi has, in the case of R.K. Refreshments & Enterprises Pvt. Ltd. and Others (supra) held that the railway coaches or rolling stock of the railways meant for transport and cannot be considered as a commercial or industrial building or factory or plant or machinery. Therefore, the cleaning services rendered in the railway coaches are not covered by the taxing statute. Since the taxing statute must be strictly interpreted as has been held by the Constitutional Bench of Hon‟ble Supreme Court in Civil Appeal No. 3327/2007, Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company and Others [2018 (361) E.L.T. 577 (S.C.)] without regard to the consequences of such interpretation. We concur with the views of the coordinate bench that railway coaches cannot be considered as commercial premises, being the rolling stock. If it had been the intention of the Legislature to cover even cleaning of railway coaches, buses, aircrafts, ships etc., they would have been specifically covered. A taxing statute has to be strictly interpreted and if someone gets out of tax net because of the way the taxing statute has been drafted, this cannot be the remedied through a judicial/quasi judicial order. We therefore hold that the appellant is not liable to pay service tax on the cleaning services."6
In view of the above, we hold that the demand of Service Tax confirmed in the impugned order for the period up to 30.06.2012 under the category of "cleaning service" is not sustainable and hence we set aside the same.
6. Applying the ratio of the above case law, we set aside the impugned order and allow the Appeal. The appellant would be eligible for consequential relief, if any as per law.
(Order pronounced in the open court on 26/09/2025.) Sd/- Sd/-
(K. Anpazhakan) (R. Muralidhar) Member (Technical) Member (Judicial) Pooja