The Karnataka High Court has remanded the matter back to post Show Cause Notice stage on the issue whether supply of manpower involved in garbage collection as well as auto tipper with condition imposed in the supply order fall within the activity of solid waste management and exempted from service tax.
The bench of Justice S Sunil Dutt Yadav has observed that the writ court cannot undertake factual appreciation after taking note of the terms of the supply order to decide the issue whether supply of manpower involved in garbage collection as well as auto tipper with condition imposed in the supply order fall within the activity of solid waste management.
Background
The petitioner/assessee is a contractor engaged in Municipal Solid Waste Management in parts of Bangalore in terms of the work orders issued by the Bruhat Bengaluru Mahanagara Palike (BBMP).
On the basis of the data received from the Central Board of Indirect Taxes and taking note of the declaration of value of services declared by the assessee in the Income Tax Returns in Form – 26AS and noticing that the assessee had not filed ST – 3 returns, the matter was taken up and the assessee was called upon to state reasons for non-payment of service tax and to furnish relevant documents.
The show cause notice has been issued and the premise on which the show cause notice has been issued is that the assessee which is carrying on cleaning services is to be construed as providing services which fall within the service tax net.
Arguments
The assessee contended that the assessee is performing fall within the Mega exemption notification of 12/2012 as amended by notification No.25/2012. Despite amendment to notification No.12/2012, what would continue to be exempted is services provided to a local authority by way of solid waste management. In terms of the supply order issued by the BBMP dated 10.03.2016, what was required to be supplied was auto tipper with drivers and helpers as also Paurakarmikas with specific obligation of garbage collection. Attention is drawn to the conditions and it is submitted that the responsibility is not only supplying transport equipment such as Auto Tippers but also supply of manpower in the form of Paurakarmikas with obligation to perform garbage collection. Accordingly, it is submitted that the work being performed would continue to fall within the notification of 25/2012-ST.
The assessee contended that the Government of India, Ministry of Finance has clarified regarding the amendment made to entry at Sl. No.2.2.2(ii) while reiterating that solid waste management would continue to remain exempted but the exemption would not be extendable to other services such as consultancy, designing etc. not directly connected with the specified services.
The department contended that the matter may be remanded to the Authority granting further opportunity to the petitioner to make out his reply to the show cause notice and the Authority would take a considered decision by taking note of the reply to be furnished as also the contentions as raised in the writ petition.
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Conclusion
The court while remanding the matter back directed the assessee to make out a comprehensive reply to enable the Authority to take a considered decision. Petitioner also to place on record all necessary documents to enable the Authority to record a finding as to the nature of work being done and service rendered to the local authority by the petitioner, as well as to enable recording a finding as to whether the activity performed falls within the exemption notification.
Case title: M/S Sapthagiri Cleaning Services V/S The Joint Commissioner Of Central Tax And G.S.T. Bengaluru South Commissionerate
Citation: Writ Petition No.19205 Of 2022 (T-Res)
Counsel for the Petitioner: Srinivasulu Naidu Raju
Counsel for the Respondent: Aravind V. Chavan
Date of Decision: 22/08/024
