2012 (7) TMI 777 - AT - Service Tax

Security Agency Services - Cooperative society - Assessee contested that they are not the commercial concerned engaged in providing security services - Held that - As decided in BHOOTPURVA SAINIK SOCIETY Versus COMMISSIONER OF C. EX. & S.T., ALLAHABAD 2011 (9) TMI 736 (Tri) that prior to 18.04.06, the definition of security agency was in relation to a commercial concerned engaged in the business of rendering services - the confirmation of service tax against the appellant for the period prior to 18.04.06 is not sustainable as appellant is a cooperative society - as definition was amended w.e.f. 18.04.06 and included any person engaged in the business of rendering services related to the security of property or any person etc the appellant is liable to pay service tax w.e.f. 18.04.06 - case remanded for re-quantification of the demand.

Summary

Issues:
1. Whether the appellant, a cooperative society of ex-servicemen providing security services, is liable to pay service tax for the period prior to 18.04.06.
2. Whether the appellant is liable to pay service tax from 18.04.06 onwards.
3. Whether the penalty imposed on the appellant is justified.

Analysis:
1. The appellant, a cooperative society of ex-servicemen providing security services, contested a demand for service tax for the period April 2003 to April 2006. The issue revolved around whether the appellant falls under the definition of 'Security Agency Services' under section 65(94) of the Finance Act, 1994. The Tribunal referred to a previous decision and held that prior to 18.04.06, the definition of security agency was in relation to a commercial concern engaged in the business of providing services. As the appellant is a cooperative society, they were not considered a commercial concern and, therefore, not liable for service tax before 18.04.06. However, the definition was amended post 18.04.06 to include 'any person' engaged in providing security services. The appellant, post this amendment, was found liable for service tax from 18.04.06 onwards.

2. The Tribunal acknowledged that the appellant is liable to pay service tax from 18.04.06 onwards due to the change in the definition of security agency. The lower adjudicating authority was directed to quantify the same. However, considering that the appellant's liability arose due to a change in the law, and not out of mala fide intentions, the penalty imposed on the appellant was set aside. The Tribunal found that the penalty was not justified as the appellant's belief that being a cooperative society exempted them from service tax was held to be bona fide. The appeal was remanded for re-quantification of the demand for the specified period.

3. In conclusion, the Tribunal ruled in favor of the appellant regarding the liability for service tax, distinguishing the periods before and after the amendment in the definition of security agency services. The penalty imposed on the appellant was set aside due to the absence of mala fide intent, and the case was remanded for re-quantification of the demand.