2010 (6) TMI 313 - AT - Service Tax

Waiver of pre-deposit - Security Agency Service - demand of Service tax is under the head Security Agency Service defined under Section 65(105)(w) - levy is on the Security Guards Board - enacted for regulating the employment of Private Security Guards employed in factories and establishments in the State of Maharashtra and for making better provisions for their terms and conditions of employment and welfare - For this purpose, the Board levies an amount from each employer as a percentage of the wages of the security guards and this amount is utilised for meeting the various expenses of the security guards or implementation of the scheme itself - Held that - Board does not appear to be a commercial concern - waiver of pre-deposit and stay of recovery in respect of the Service tax amount, interest thereon and penalties

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery application.
2. Applicability of service tax on the Security Guards Board under the Maharashtra Private Security Guards Act.

Analysis:
1. The appellant filed two applications before the Appellate Tribunal CESTAT, Mumbai - one for waiver of pre-deposit and stay of recovery, and the other for out-of-turn hearing of the stay application. The Tribunal noted that since the stay application itself was up for consideration, the other application was dismissed as infructuous. The stay application sought waiver of pre-deposit and stay of recovery concerning a service tax amount and penalties imposed under various provisions of the Finance Act '94. The demand was related to the "Security Agency Service" under Section 65(105)(w), defining taxable service as service provided by a security agency. The Tribunal considered the definition of a security agency under Section 65(94) and the nature of services provided to determine the applicability of the tax.

2. The impugned levy was on the Security Guards Board constituted under the Maharashtra Private Security Guards Act, which regulated the employment of private security guards in the state. The Board implemented the Private Security Guards Scheme, 2002, to ensure adequate supply and utilization of security guards in factories and establishments. The Scheme outlined provisions for remittance of wages and other levies by registered principal employers to the Board, as well as the defrayal of costs for providing benefits to registered security guards. The Tribunal analyzed the provisions of the Scheme, including clauses related to payment of levies and benefits to security guards, to determine the nature of the Board's operations and its classification as a commercial concern.

3. After hearing submissions from both sides, the Tribunal found that the Security Guards Board did not fit the definition of a security agency as a commercial concern under the Finance Act. The Board was established for formulating and implementing welfare schemes for security guards, rather than engaging in the commercial business of providing security services. The Board collected levies from employers for the welfare of security guards and scheme implementation, indicating a non-commercial, welfare-oriented objective. The Tribunal disagreed with the lower authorities' interpretation and the arguments presented by the department, concluding that the Board was not liable to pay service tax under Section 73. Consequently, the Tribunal granted waiver of pre-deposit and stay of recovery for the service tax amount, interest, and penalties, based on the Board's non-commercial nature.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Mumbai provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the applicability of service tax on the Security Guards Board under the Maharashtra Private Security Guards Act.