2004 (8) TMI 5 - AT - Service Tax

Service Tax Security Agency Scrutinizing of the appellant stand-in as service organization or making profits as business concern

Summary

Issues:
1. Whether the appellants, a charitable society, are liable to pay service tax under the category of 'security agency' as per the Finance Act, 1994.

Analysis:
The appellants, registered as a charitable society, claimed exemption from various Acts and taxes based on their charitable activities for the welfare of Ex-Servicemen and their families. They contended that their organization operates purely in a non-commercial field as a Charitable Organisation. The main contention was that they are not a commercial concern and do not earn profits, thus should not be considered a commercial activity for imposing service tax under the definition of 'security agency' as per Sec. 65(40) of the Finance Act, 1994.

The ld. Counsel for the appellants argued that the appellants' activities are not commercial as they do not have a profit motive and do not prepare balance sheets of profit and loss. Citing judgments of the Apex Court, the counsel emphasized the need for a profit motive to constitute a commercial activity. The appellants provided evidence such as contingent bills, acquaintance roles of security guards, and agreements with state organizations to support their claim that they are a service organization and not a profit-making business concern participating in tenders.

After considering the arguments and evidence presented, the Tribunal concluded that the matter should be remanded back to the original authority for a fresh consideration. The Tribunal noted that the only ground for considering the appellants as a commercial concern was their participation in tenders. However, in line with the Supreme Court judgments cited, the authorities should assess whether the appellants operate with a profit motive as a business concern. The original authority is directed to reexamine the documents and judgments provided by the appellants to determine if they meet the criteria of a 'security agency' under the Finance Act, 1994. The appellants are granted an opportunity to present their case and submit relevant documents during the reconsideration process.

In conclusion, the appeal was allowed by remand, and the original authority was instructed to conduct a detailed review considering the appellants' non-profit status and charitable activities before making a decision on their liability to pay service tax under the category of 'security agency'.