2021 (12) TMI 1048 - AT - Service Tax

Classification of services - security services or not - providing armed security guards to public sector banks / undertakings and government departments and collection of charges for the same - HELD THAT - The appellant is performing statutory duties and the amount so collected is being deposited in the government treasury. CBEC has issued a Circular No.89/7/2006-ST dated 18.12.2006 clarifying that wherever the charges collected by any sovereign public authority for carrying out any statutory function the same is not liable to levy of service tax. Further there is a CESTAT decision 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 concluded that the police department which is in the agency of State Government cannot be considered to be a person engaged in the business of running security services. The CESTAT in the said decision has held that the activity undertaken by the police is not covered by the definition of security agency under Section 64(94) of the Finance Act 1994 - same view has been expressed by the Mumbai Bench of the Tribunal in the case of MUMBAI POLICE VERSUS COMMISSIONER OF SERVICE TAX MUMBAI 2018 (4) TMI 418 - CESTAT MUMBAI . Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether providing armed security guards to public sector banks/undertakings and government departments falls under the definition of 'security services' for service tax liability under the Finance Act, 1994.

Analysis:
The appeal before the Appellate Tribunal CESTAT Mumbai involved a case where the Commissioner of Police, Navi Mumbai Police, challenged an Order-in-Original passed by the Commissioner of Service Tax-VII, Mumbai. The issue at hand was whether providing armed security guards to public sector banks/undertakings and government departments should be considered 'security services' subject to service tax under the Finance Act, 1994. The appellant, a part of the Maharashtra State Police force, collected charges for these services based on actual expenditure incurred. The Tribunal considered the arguments presented by both parties, with the appellant represented by a Chartered Accountant and the Revenue represented by an Additional Commissioner, Authorized Representative.

The appellant's counsel contended that the issue had already been settled in their favor by previous Tribunal orders and affirmed by the Apex Court. The Tribunal acknowledged the merits in the appellant's submissions and allowed the applications for early hearing of appeals. Given that the issue involved two government agencies, namely the Commissioner of Police and Commissioner of Service Tax, and considering the consent of both sides, the appeals were taken up for final hearing.

The Tribunal referenced various decisions, including those related to Mumbai Police, Deputy Commissioner of Police Jodhpur, Superintendent of Police, Commissioner of Central Excise & Service Tax, Punjab National Bank, U.P. Police, and others, to support the appellant's position. Additionally, the Tribunal highlighted Circular No.89/7/2006-ST issued by the CBEC, which clarified that charges collected by sovereign public authorities for statutory functions, deposited into the government treasury, are not liable for service tax. The Tribunal also cited a CESTAT decision regarding the police department not being engaged in the business of providing security services under the Finance Act, 1994.

Based on the precedents and legal interpretations discussed, the Tribunal concluded that the appellant, while performing statutory duties and depositing collected amounts into the government treasury, was not liable for service tax on the charges for providing armed security guards. Consequently, the appeals were allowed, and the impugned order was set aside.