2018 (1) TMI 271 - AT - Service Tax

Security Agency Service - demand of service tax - Held that - identical issue decided in the case of The Deputy Commissioner of Police Jodhpur, Superintendent of Police Versus Commissioner of Central Excise and Service Tax, Jaipur 2016 (12) TMI 289 - CESTAT NEW DELHI , where it was held that police department, which is an agency of the State Govt., cannot be considered to be a person engaged in the business of running security services. Consequently, the activity undertaken by the police is not covered by the definition of Security Agency under Section 64(94) of the Act - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Delay condonation in appeals.
2. Alleged provision of Security Agency Service without registration.
3. Interpretation of relevant legal provisions.
4. Levy of service tax on activities of the police department.

Delay Condonation in Appeals:
The judgment begins by condoning the delay in filing the appeals for reasons mentioned in the cause of delay. Both appeals are admitted after the delay is condoned.

Alleged Provision of Security Agency Service Without Registration:
The case involves the appellant, Superintendent of Police in various districts in Rajasthan, alleged to have provided Security Agency Service without proper registration. The department demanded service tax on this service, leading to the filing of the present appeals by the appellant.

Interpretation of Relevant Legal Provisions:
The Tribunal heard arguments from both parties and examined the issue in light of previous orders. It was noted that the police department collected fees for providing additional police force as per notifications issued under the Rajasthan Police Act. The Tribunal found that the fees collected were in the nature of statutory charges deposited into the government treasury, fulfilling the conditions stipulated by the CBEC circular. The Tribunal concluded that the activities of the police department in deploying personnel on a payment basis were part of the statutory function of the State Government, and the fees collected were considered statutory in nature. Therefore, no service tax could be levied on such activities.

Levy of Service Tax on Activities of the Police Department:
The Tribunal held that the police department, as an agency of the State Government, could not be considered a "person" engaged in the business of running security services. The activities undertaken by the police department were deemed not covered by the definition of Security Agency under the Finance Act, 1994. Relying on a CBEC circular, the Tribunal concluded that no service tax could be levied on the activities carried out by the police department. The judgment set aside the impugned order and allowed the appeals, stating that the fees collected by the police department were in the nature of fees prescribed for performing statutory functions and deposited into the government treasury.

In conclusion, the Tribunal allowed both appeals and condoned the costs of delay. The judgment highlighted the statutory nature of the fees collected by the police department for providing additional police force, emphasizing that such activities were part of the sovereign function of the State Government, exempting them from service tax levy.