2025 (4) TMI 443 - AT - Service Tax

Levy of service tax - security agency services - it is submiited by appellant that the services rendered by them in course of their regular duties to public sector undertakings and there was no commercial activity - HELD THAT - This issue is no longer res integra being decided by the Tribunal in the cases of Commandant Home Guard Training Centre vs. CGST Udaipur 2021 (7) TMI 195 - CESTAT NEW DELHI and Deputy Commissioner of Police Jodhpur vs. CCE ST Jaipur 2016 (12) TMI 289 - CESTAT NEW DELHI wherein the Tribunal has decided the issue in favour of the appellants holding that the police department which is an agency of state government cannot be considered to be a person engaged in the business of providing security services; consequently the activity undertaken by the police is not covered by the definition of security agency under Section 65(94) of the Finance Act 1994; it is also found that in terms of CBEC Circular on the subject the fees collected by the police department is in the nature of fee fixed for the statutory function which has been deposited into the government treasury; in the light of CBEC Circular also there can be no levy of service tax on such activities. Conclusion - The police departments as state agencies are not engaged in the business of providing security services and thus do not fall under the definition of security agency per Section 65(94) of the Finance Act 1994. The impugned order cannot be sustained. The appeal is accordingly allowed.

Summary

The Appellate Tribunal CESTAT Chandigarh, comprising Member (Judicial) Mr. S. S. Garg and Member (Technical) Mr. P. Anjani Kumar, reviewed an appeal concerning a service tax demand of Rs. 39,86,621/- imposed on Punjab Home Guards, Amritsar, for allegedly providing "security agency services." The original order, dated 30.08.2011, confirmed the tax demand, which was upheld by an impugned order on 31.10.2013.The appellant, represented by Shri Jasbir Singh, argued that their services to public sector undertakings were not commercial activities, referencing previous favorable decisions. The department's representative reiterated the findings of the impugned order.Upon review, the Tribunal noted that the issue had been previously resolved in favor of similar appellants in cases such as Commandant Home Guard Training Centre vs. CGST, Udaipur and Deputy Commissioner of Police, Jodhpur vs. CCE & ST, Jaipur. These cases established that police departments, as state agencies, are not engaged in the business of providing security services and thus do not fall under the definition of "security agency" per Section 65(94) of the Finance Act, 1994. Additionally, fees collected by such departments are considered statutory fees deposited into the government treasury, exempting them from service tax as per CBEC Circulars.The Tribunal also referenced a jurisdictional High Court of Punjab & Haryana decision supporting the appellants in a similar case. Consequently, the Tribunal concluded that the impugned order could not be sustained, and the appeal was allowed. The operative part of the order was pronounced in open court.