2014 (6) TMI 726 - AT - Service Tax

Tribunal upholds service tax demand for security agency services, grants waiver and stay

SPECIAL PROTECTION FORCE Versus COMMISSIONER OF CENTRAL EXCISE, VISAKHAPATNAM-II

The Tribunal upheld the adjudication order confirming the demand for service tax, interest, and penalties for providing security agency services without ... Demand of service tax - security agency service - Petitioner contends that since the Andhra Pradesh Special Protection Force is a part of the State Government, is a body created under the Andhra Pradesh Protection Force Act, 1991, charges or fees levied by it for providing security services would constitute Revenue of the State beyond the taxing powers of the Union of India qua under Article 289 of the Constitution of India. - Held that:- there is no prima facie persuaded to accept this contention of the appellant. - appellant directed to deposit service tax and interest - pre-deposit of penalty waived - stay granted partly. Issues:1. Appeal against adjudication order confirming demand of service tax, interest, and penalties for providing security agency service without filing returns or remitting service tax.2. Contention regarding charges levied by Andhra Pradesh Special Protection Force for security services constituting State revenue beyond Union's taxing powers.3. Consideration of levy of penalty in the appeal.Analysis:Issue 1:The appeal was filed against the adjudication order confirming the demand of service tax, interest, and penalties for providing 'security agency service' without filing returns or remitting service tax on receipts. The appellant argued that the charges or fees levied by the Andhra Pradesh Special Protection Force for security services should be considered as State revenue beyond the Union's taxing powers.Issue 2:The Tribunal, after perusing the adjudication order and the material on record, was not initially convinced to accept the appellant's contention regarding the charges levied by the Andhra Pradesh Special Protection Force. However, the Tribunal decided to consider the issue of levy of penalty during the appeal hearing.Issue 3:The Tribunal granted a waiver of pre-deposit and stay of further proceedings based on the condition that the petitioner remits the adjudicated tax liability plus interest within a specified timeline and reports compliance accordingly. Failure to comply with the conditions would result in the dissolution of the stay and rejection of the appeal without further reference to the Tribunal.This judgment highlights the importance of complying with tax obligations and the process of appealing against adjudication orders. The Tribunal's decision to grant a waiver of pre-deposit and stay of proceedings showcases a balance between ensuring compliance and providing an opportunity for the appellant to present their case during the appeal hearing.