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2023 (12) TMI 183 - AT - Service TaxLevy of service tax - security agency service or not - providing services to private persons, for companies for activities like escort of cash, security services to private/ public sector banks , security to individuals, Securities and others - appellant is a police department of Government - HELD THAT - The identical issue has already been considered in DY. INSPECTOR GENERAL OF POLICE VERSUS COMMISSIONER OF C. EX., BHOPAL 2017 (11) TMI 346 - CESTAT NEW DELHI where it was held that CESTAT in the case of Dy. Commissioner of Police Others v. CCE, Jaipur Others, 2016 (12) TMI 289 - CESTAT NEW DELHI 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 issue in hand has already been settled in the aforesaid decision - in the present case also, the demand of service tax is not sustainable - Appeal allowed.
Issues Involved:
1. Classification of services provided by the police department. 2. Liability of the police department to pay service tax under the Finance Act, 1994. 3. Interpretation of the term "person" under Section 65(105)(w) of the Finance Act, 1994. 4. Sovereign functions and their exemption from service tax. Summary: Classification of Services: The appellant, a police department, provided security services to private persons, companies, banks, and other organizations. The department classified these services under "Security Agency Service" as defined in Section 65(105)(w) of the Finance Act, 1994, and contended that they were liable for service tax. Liability to Pay Service Tax: The appellant argued that as a government entity performing sovereign functions, it was not liable for service tax. The services provided were in the interest of public law and order, which are sovereign functions not covered by the definition of "person" under Section 64(94) of the Finance Act, 1994. Interpretation of "Person": The Tribunal referred to previous judgments and the General Clauses Act, 1897, to interpret the term "person." It was concluded that the term does not include the State or its officers. The Tribunal cited the Supreme Court's decision in West Bengal v. Union of India [AIR 1963 SC 124], which held that the definition of "person" does not extend to include the State. Sovereign Functions and Exemption: The Tribunal examined whether the police department's activities were sovereign functions. It referred to Circular No. 89/7/2006-S.T., which clarified that statutory duties performed by sovereign/public authorities are not liable for service tax. The Tribunal found that the police department's activities, including the deployment of additional police force for public security, were statutory functions. The fees collected for these services were deposited into the government treasury, satisfying the conditions for exemption from service tax. Conclusion: The Tribunal concluded that the police department, as an agency of the State Government, is not a "person" engaged in the business of running security services. Consequently, the activities undertaken by the police are not covered by the definition of Security Agency under Section 64(94) of the Finance Act, 1994. The fees collected for statutory functions are not subject to service tax. The appeal was allowed, and the impugned order was set aside. (Pronounced in the open court on 04.12.2023)
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