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TMI Blog2024 (11) TMI 1445X X X X Extracts X X X X X X X X Extracts X X X X ..... l in the SCN Findings in the Impugned Order 1. Support Services Rs. 2,43,67,998 The Appellant has received services of the State Police Department for protection of members of its raid party deployed for conducting raids against thieves of electricity to prevent theft of electricity. Such services could have been performed by the staff of the Appellant, and therefore, such activities do not qualify as 'sovereign function'. Accordingly, the Appellant has received support services from the State Police Department and has reimbursed the salaries and allowances of the officers to the Police Department. The amounts reimbursed is taxable in the hands of the Appellant on reverse charge basis. The sovereign activities assigned to the State Police Authority are to protect life and property without consideration. Ajmer Discom has been created for distribution and supply of electricity. The State Police Department has rendered services on the request of the Appellant and has received fees which is prescribed by the Directorate General of Police. Such services are not covered under sovereign functions of the Police but are covered under the scope of 'support service' by way of security. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which service tax liability has been fastened on the appellant under reverse charge basis. It is the submission of the learned counsel for the appellant that the appellant is engaged in production, distribution and supply of electricity in the State of Rajasthan. The said area, where the Appellant operates, is prone to heavy theft of electricity at various stages. In order to prevent such theft, the Appellant has formed a vigilance group (raid group), which conducts regular vigilance and raids. Since the members of the vigilance group were frequently attacked by culprits, the Appellant sought assistance from the State Police Department by way of additional police force. The said transaction is subject to dispute in the present matter. It is his submission that such hazards concerning theft of electricity are common to the State of Rajasthan and for this reason, the Government of Rajasthan, vide Notification dated 21.2.2006 has declared 34 police stations as 'Anti Power Theft Police Stations'. These APT police stations deploy personnel to Discoms such as the Appellant, Jaipur Discom and Jodhpur Discom. It is his submission that periodically, the salary and other allowances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firming the demand, the Impugned Order has wholly relied on obsolete provisions of Section 65(104c) read with 65(105)(zzzq) of the Act. It is submitted that the present demand pertains to the period July 2012 to March 2016, which is in the negative list regime when the classification-based levy ceased to exist. Therefore, the demand has been confirmed by invoking/examining obsolete provisions of the Act. Therefore, demand is not sustainable as being based on obsolete provisions. Reliance in this regard is placed on the following decisions: Haiko Logistics India Pvt. Ltd. vs. Commissioner of Service Tax- Delhi 3 and Commissioner of Central GST Audit-II (Vice Versa) 2023 (8) TMI 539- CESTAT New Delhi Kusum Healthcare Pvt. Ltd. vs. CCE & ST, Alwar (Raj.) 2023 (3) TMI 173-CESTAT New Delhi CST, Bangalore vs. The Peoples Choice [2014-TIOL-431-HC-KAR-ST] 5. He further submitted that the activity undertaken by the appellant does not qualify as support service in terms of Section 65B (45) of the Act. Therefore, no service tax is payable by the appellant. It is further submitted that in this case the demand has been raised against the appellant under reverse charge mechanism that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been affirmed by the Supreme Court in Commissioner of Central Excise and Service Tax vs. South Eastern Coalfields Limited - 2023 (8) TMI 606 (SC). 9. It is further submitted that part of the demand is barred by limitation and the show cause notice has been issued by invoking extended period of limitation for the period July 2012 to March 2016 whereas the period upto March 2015 is barred by limitation. Therefore, the demand pertaining to extended period is not sustainable. Consequently, no penalty can be imposed on the appellant. For rest of the demand, the appellant conceded that the service tax has been paid for settlement committee fees. 10. On the other hand, learned AR supported the impugned order. 11. Heard the parties and considered the submissions. 12. We find that the main contention pertains to demand of service tax of Rs. 2,43,67,998/- under support service. The said demand has been raised on the appellant under reverse charge mechanism as the period involved in this matter is from July 2012 and the demand has been raised against the appellant by invoking erstwhile under the provisions of Section 65 (104c) the Finance Act, 1994 read with Section 65 (105) (zzzq) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oubt that the police has a statutory duty to provide security. The Second condition is that the fee should be collected as per law. Section 46 of the Police Act provides for the State Government providing Police Force for fee for user charges in some cases. The present demand is on the amounts collected as user fee which are levied upon the Section 46 of the Police Act, and therefore, the second condition is also fulfilled. The third condition is that the amount so collected must be deposited into the Government treasury. There is no doubt in the entire proceedings that the amount so received was deposited in the Government treasury. In view of above, we find that all conditions required in the above circular of CBEC are fulfilled. Therefore, no service tax chargeable under Security Agency Services upon the Appellant. The CBEC circular being binding on the department, a demand to the contrary is not sustainable and needs to be set aside." Therefore, on merits as well as on technical grounds, we hold that the appellant is not liable to pay service tax for support services amounting to Rs. 2,43,67,998/-. Accordingly, the said demand is set-aside. 13. With regard to amount collected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has received tender cost for non-fulfilment of conditions of tender which is towards the said amount is collected for damage or loss incurred by the appellant and not for providing any service, in that circumstances no service tax can be demanded from the appellant by invoking the provisions under Section 66E (e) of the Act.
16. With these terms, we pass the following order:-
(a) demand under support service amounting to Rs. 2,43,67,998/- is set-aside
(b) demand of service tax on account of vendor registration charges, tender cost and inspection charges of meters are also set-aside
(c) demand of service tax of Rs. 51,16,796/- for the amount recovered on account of pre-term resignation of the employees and penalty for non-compliance with terms and conditions of tender are set-aside.
In the facts and circumstances of the case, no penalty can be imposed on the appellant. Accordingly, the penalties imposed on the appellant are set-aside.
17. Further, rest of the demand confirmed by the impugned order is payable by the appellant along with interest.
18. With these terms, the appeal is disposed of.
(Order dictated and pronounced in the open Court) X X X X Extracts X X X X X X X X Extracts X X X X
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