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TMI Blog2011 (9) TMI 736X X X X Extracts X X X X X X X X Extracts X X X X ..... erson were made liable to service tax - This amendment in the definition also supports our view that prior to 18-4-2006 legislature intended to tax security services provided by only commercial concern and not by organisations other than commercial concerns - Decided in favor of the assessee - 481/2006, 220/2005, 1, 65 & 82/2006 & 394, 451, 419, 680 & 695/2007 , 490/2008 - ST/457-467/2011(PB) - Dated:- 8-9-2011 - Ms. Archana Wadhwa, Shri Mathew John, JJ. REPRESENTED BY : S/Shri L.P. Asthana, Ms. Sukriti Das, Vijay Kumar, Advocates and Sanjeev, Clerk of Advocate, for the Assaessee. S/Shri R.K. Gupta, DR, Amrish Jain and K.K. Jaiswal, SDRs, for the Department. [Order per : Archana Wadhwa, Member (J) (Oral)]. The present bunch of appeals is being disposed of by a common order as the issue involved is identical. Vide impugned order, the authorities below have confirmed the demand of service tax raised against the appellants on the ground that they have rendered security agency services during the period relevant in each appeal, which is a taxable service. Accordingly, in all the cases, the demands stand confirmed against them by invoking extended period of limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R. 400 (Tribunal). The demand was also assailed on the point of limitation. 5. The original adjudicating authority did not find favour with appellants submission and vide his order dated 23-12-2005 held that as the society was taking remuneration from BSNL for paying the salaries of security personnel, they are a commercial concern, liable to tax. Accordingly, he confirmed the demand of service tax along with interest and imposed penalty of Rs. 500/- and Rs. 1000/- in terms of the provisions of Section 75A and Section 77 of the Finance Act, 1994 respectively. The appeal against the above order did not succeed before the Commissioner (Appeals). Hence the present appeals. 6. We have heard Shri L.P. Asthana, Advocate appearing for the said appellants as also the other Advocate appearing for the other appellants. Shri R.K. Gupta, SDR appeared for the Revenue. 7. We find that the security agency services were liable to pay service tax inasmuch as the provisions of Section 65(105) of Finance Act, 1994 defines taxable service as under :- Taxable service means any service provided or to be provided to any person, by a security agency in relation to the security of any property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of C.C.E., Mangalore v. Employ Me - 2006 (4) S.T.R. 303 (Tri.-Bang.), it was held that since the respondent s organisation imparting training to youth in leadership and later finding some placement for them against fee charged will not be considered as commercial concern. The Tribunal observed that as there is no definition of commercial concern in the Finance Act, 1994 and Service Tax Rules, the popular meaning of the expression commercial concern is required to be adopted. It was accordingly observed by the Bench as under :- .............The Oxford Advanced Learner s Dictionary gives the following definitions of commercial as (i) connected with the buying and selling of goods and services; (ii) (only before noun) making or intended to make a profit. The definition used in the statute for Manpower Recruitment is Manpower Recruitment Agency means any Commercial concern engaged in providing service, directly or indirectly, in any manner for recruitment of manpower, to a client. A careful reading of the above definition makes it clear that Manpower Recruitment Agency provides service for recruitment of Manpower to a client. In that case, the Agency receives consideration fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of making profit, cannot be held to be a commercial concern. The Tribunal also took note of the Apex Court judgment delivered in the case of Additional CIT v. Surat Silk Cloth Manufacturers Association (SSCMA) - (121) ITR 1 (SC) laying down that the main object of SASMIRA was to promote commerce and art silk, cotton etc. To supplement the main object, the SSCMA was undertaking the activity of obtaining licences for import of foreign yarn and quotas for purchase of indigenous yarn. They, though making profit on the above activity, cannot be held to be a commercial concern, as the object of the said organisation was for general public utility. The relevant paragraph from the said decision of the Apex Court in the case of SSCMA is reproduced below for the sake of clarity and ready reference :- ............But where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity. The exclusionary clause does not require that the activity must be carried on in such a manner that it does not result in any profit. It would indeed be diffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and such sale cannot be held to be in the context of business activity and cannot be taxed to sales tax. Reference to the above decision though not exactly on the issue involved, is called for to understand and to arrive at the correct interpretation of the expression Commercial concern . As held by the Hon ble Supreme Court, it is not an activity in isolation which is relevant for holding an organisation as commercial concern. The entire intent and object is to be looked into. The appellants herein are registered societies or association for the welfare of the ex-servicemen. The appellants are not providing security services by offering non ex-servicemen persons as security staff, neither motive of the said organisation is to earn profit from the said activity. They are only charging 5% commission from their customers for providing such service which in fact is necessary for running and maintenance of the organisation. Fbr bringing the society under service tax net, there must be a person who is running security agency as a business. He may or may not earn profit inasmuch as profit is not earned in all the business activities, but the intention of carrying on the business with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry to main non-business activities, but they cannot be treated as business without any plea by the State of Tamil Nadu that the Port Trust had an independent intention to carry on business in the sale, of unserviceable/unclaimed goods. That is not the case of the Department in the show cause notice. Further, from the counter affidavits filed in the High Court it is clear that is not the case of the State that there is any separate intention on the part of the Port Trust, to carry on business in the unservicable unclaimed goods. Its contention has been that the main activities of the Port Trust amounted to carrying on business . The argument fails in view of our finding that the main activity is not one amounting to carrying on business . 13. As against the judgments referred supra which are supporting the appellants contention, learned DR has drawn our attention to Division Bench judgment in the case of Punjab Ex-Servicemen Corporation v. C.C.E., Chandigarh reported in 2009 (13) S.T.R. 529 (Tri.-Delhi) wherein the Hon ble Bench has held that the security service provided by the association of ex-servicemen are liable to service tax, having been provided for commercial co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions which are on the point, we hold that the association, co-operative society or organisation which saw the light of the day with the sole object and intent to serve the ex-servicemen and to look after the welfare activity of their families cannot be held to be a commercial concern so as to make them liable to service tax. We make it clear that the said declaration of law would be applicable only for the period prior to 18-4-2006 inasmuch as the definition of security agency thereafter was amended and the security service provided by any person were made liable to service tax. This amendment in the definition also supports our view that prior to 18-4-2006 legislature intended to tax security services provided by only commercial concern and not by organisations other than commercial concerns. 17. In view of our foregoing discussions, we hold that appellants are not liable to any service tax. Inasmuch as the facts in other appeals are identical, the appeals are being allowed by setting aside the impugned orders. 18. As we have held in favour of the assessee on the merits of the case, we are not dealing with the other pleas raised before us as regards the limitation or va ..... X X X X Extracts X X X X X X X X Extracts X X X X
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