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2024 (2) TMI 1082 - AT - Service TaxClassification of services - Security Services or not - Government of Tripura has entered into a memorandum of understanding with ONGC, which is a Public Sector Undertaking (PSU) owned by the Government of India, for a period of 10 years to raise a full battalion of the Tripura State Rifles mainly for dedicated deployment to ONGC for security services - providing services to the Public Sector Undertaking - HELD THAT - The issue involved in these cases is squarely covered by the decision of this Tribunal in the case of MUMBAI POLICE VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI 2018 (4) TMI 418 - CESTAT MUMBAI , wherein this Tribunal has observed activity undertaken by the police is not covered by the definition of Security Agency under Section 64(94) of the Act. In this case also, the appellant is not engaged in the business of providing security services, therefore, following the precedent decision of this Tribunal, it is held that as the appellant is not engaged in the business of providing security services, therefore, the appellant is outside the purview of security services as defined under Section 65 (94) of the Finance Act, 1994. The appellant is not liable to pay service tax - the impugned demand against the appellant is set aside - appeal allowed.
Issues Involved:
1. Classification of services provided by the appellant. 2. Liability to pay service tax under the category of "Security Services." 3. Applicability of statutory and constitutional duties exemption. Summary: Issue 1: Classification of Services Provided by the Appellant The Government of Tripura entered into a memorandum of understanding with ONGC for providing security services through the Tripura State Rifles. The appellant received remuneration for these services. The Revenue classified these activities under "Security Services" and initiated proceedings to demand service tax. Issue 2: Liability to Pay Service Tax Under the Category of "Security Services"The appellant contested the classification, arguing that as a Government of India Undertaking, the remuneration received went to the Government Treasury, and they were not engaged in any business of providing security services. They claimed exemption from service tax under Section 65 (94) of the Finance Act, 1994. However, the adjudicating authority confirmed the demand for service tax against the appellant. Issue 3: Applicability of Statutory and Constitutional Duties ExemptionThe Tribunal referred to the case of Mumbai Police Vs. Commissioner of Service Tax, Mumbai, where it was held that the State Police, being a sovereign authority, is not engaged in the business of running security services. The Tribunal observed that the activities performed by sovereign/public authorities under statutory duties, where the fee collected is deposited in the Government Treasury, are not liable for service tax. The Tribunal concluded that the appellant, similar to the police department, is not engaged in the business of providing security services and is outside the purview of security services as defined under Section 65 (94) of the Finance Act, 1994. Consequently, the Tribunal set aside the impugned demand and allowed the appeals with consequential relief, if any.
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