Cleaning activity carried on Port Area does not come u/S 65(24b) of the Finance Act: CESTAT [Read Order]

The Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) recently held that cleaning activity on the port area does not come under Section 65(24b) of the Finance Act.

Appellant, Patel Construction Co entered into contract with the Kandla Port Trust for the activity of modifying the port, barge handling, strengthening of the surface and dredging.

The appellant was given a contract by Kandla Port Trust to remove civil and cargo waste periodically from the port to maintain the standards of hygiene and to avoid pollution in the port area.

During the course of audit of financial records, the officers of Central Excise denied exemption to payment of certain services provided by the appellant and made additions.  

Moreover, the adjudicating authority has confirmed the demand of Rs. 11,09,875/- under the head of cleaning services. Against this, the assessee filed an appeal before the tribunal.

Amal Dave, counsel for appellant submitted that as per Section 65(24b) of the Finance Act, it is clear that whenever cleaning activity is performed in the premises which is a commercial or industrial building or factory, plant or machinery, tank or reservoir such commercial or industrial building and premises thereof then the activity is taxable.

It was submitted that the activity has not been performed in any commercial or industrial building premises. The activity was performed in the port area for the Kandla Port Trust, which is owned by the State Government and is not a commercial or industrial building nor can it be called factory, plant or machinery.

Rajesh Agarwal, counsel for the revenue supported the order passed by the assessing officer.

While considering the submission of the appellant, the CESTAT Bench comprising Ramesh Nair (Judicial) and Raju (Technical) found that the adjudicating authority had wrongly confirmed the demand under the head of cleaning services, whereas their activity is not covered under the scope of cleaning services.

Therefore, the cleaning activity carried on the port area was held  to not come under Section 65(24b) of the Finance Act.

To Read the full text of the Order CLICK HERE

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