2014 (11) TMI 246 - AT - Service Tax

Waiver of pre deposit - Security Agency Services - nature of services provided by the Mumbai Police to individuals or organizations in conducting various private and public events - Held that - prima facie the services provided by deployment of additional police force, either to individuals or for public events, partakes the nature of maintenance of peace and preservation of order. Further, the costs paid by the service recipients gets credited to the consolidated fund of the State, which is also suggestive of statutory/sovereign nature of the function. appellant has made a strong case for grant of stay - Following decision of Security Guards Board vs. Comm. Of Central Excise, Thane II 2011 (9) TMI 113 - BOMBAY HIGH COURT - Stay granted.

Summary

Issues:
Service tax demand against Mumbai Police for security services provided during events.

Analysis:
The appeal and stay petition challenged an Order-in-Original confirming a service tax demand against Mumbai Police for providing security services during private and public events. The Commissioner concluded that these services fell under 'Security Agency Services'. The appellant argued that the services were provided under the Mumbai Police Act, where the cost was borne by the recipients and not the police department. The appellant sought a stay on the demand.

The appellant's consultant cited provisions of the Mumbai Police Act, emphasizing that the deployment of additional police force was a sovereign function related to maintaining law and order. The consultant argued that the cost was covered by the state's budget and did not go to the police department's funds. Previous tribunal decisions and a Bombay High Court ruling were referenced to support the appellant's case for a stay.

The Revenue representative reiterated the Adjudicating authority's findings and compared the situation to the Central Industrial Security Forces, where security services were deemed taxable. A CBEC Circular was cited to argue that police services, including providing 'Escort' services, were not statutory or sovereign functions and thus liable to service tax under 'Security Agency Services'.

The Tribunal analyzed the provisions of the Mumbai Police Act, noting that the services provided by the police for maintaining peace and order suggested a sovereign nature. Considering the precedents and the nature of the services, the Tribunal found that the appellant made a strong case for a stay. Consequently, the Tribunal granted an unconditional waiver from pre-deposit of the dues and stayed the recovery during the appeal, allowing both parties to seek an early hearing due to the substantial revenue involved.