2009 (3) TMI 198 - AT - Service Tax

Service of security agency - Applicant filed this Application for waiver of pre-deposit of an amount of Service Tax of Rs. 57,03,262/- and penalties. The demand was confirmed on the ground that Applicant provided the service of security agency to Kolkata Metro which is taxable and had not paid the Service Tax. Revenue relied upon the terms and conditions of letter of acceptance under which the service is provided by the applicant which is in respect of supply of the watch and ward staff. i.e. Security Guards - The Applicants had not pleaded any financial hardship. Pre-deposit partly waived

Summary

Issues:
1. Application for waiver of pre-deposit of Service Tax and penalties.
2. Whether the services provided constitute security agency services.
3. Consideration of amounts deposited during investigation.
4. Interpretation of the term "security agency" under the Finance Act.

Analysis:

1. The applicant filed an application seeking a waiver of pre-deposit of Service Tax amounting to Rs. 57,03,262 along with penalties. The demand was based on the provision of security agency services to Kolkata Metro, which the applicant contested, claiming that only Safaiwala, Helpers, and Coin Exchangers were supplied, not security services.

2. The Revenue contended that the service provided by the applicant constituted security agency services, as evidenced by the terms of the tender and acceptance letter, and the invoices issued for watch and ward staff, specifically Security Guards. The Tribunal found that the applicant did provide security services to Kolkata Metro, leading to the confirmation of the demand.

3. Regarding the amounts deposited during the investigation, it was noted that only Rs. 5,00,000 was deposited concerning the present proceedings, while the remaining amounts were related to a separate proceeding initiated by the Commissioner of Siliguri, not linked to the services provided to Kolkata Metro.

4. The Tribunal referred to the definition of "security agency" under the Finance Act, which includes the provision of security personnel for property or individuals. It was established that the applicant supplied Security Guards for deployment at Kolkata Metro stations and installations, meeting the criteria of a security agency. As the applicant failed to demonstrate financial hardship and did not warrant a total waiver of Service Tax, they were directed to deposit Rs. 20,00,000 within six weeks, with the remaining pre-deposit amount and penalties waived upon compliance.

This judgment highlights the importance of correctly interpreting the nature of services provided in tax disputes and the significance of complying with deposit requirements in such cases to ensure the interest of revenue is safeguarded.