2017 (12) TMI 1309 - AT - Service Tax

Security agency services by Police Department exempt from service tax under Finance Act, 1994.

The Police Department providing Security Agency Services was not liable to pay service tax under the Finance Act, 1994. The Tribunal held that the ... Security agency service provided by Police department - levy of service tax - Held that: - the appellant have rendered statutory function, as providing security is a sovereign function - the service provided by appellant, are not taxable, as clarified by Circular No.96/7/2007-ST. - appeal allowed - decided in favor of appellant. Issues involved:1. Whether the Police Department providing Security Agency Services is liable to pay service tax under the Finance Act, 1994.Comprehensive Analysis:The appeal was filed by the Police Department against the Order-in-Original passed by the Commissioner of Central Excise & Customs, Ghaziabad, demanding service tax on the basis that the department provided Security Agency Services. The issue revolved around whether the Police Department's activities fell within the definition of Security Agency Services under Section 65 (105)(w) of the Finance Act, 1994. The department provided police personnel for security purposes and character verification services but did not register for service tax or pay the charges collected for these services.The main grounds of appeal included arguments that the term 'person' in the definition of Security Services did not include the State and its instrumentalities, therefore no service tax was payable by State Governments. It was contended that the State Police were not engaged in the business of Security Services, which was a prerequisite for service tax liability. Additionally, the appellants argued that they were not engaged in rendering services relating to security and that the Circular No. 96/7/2007-ST clarified that no service tax was payable by sovereign/public authorities carrying out statutory functions.The appellant relied on various case laws to support their arguments, emphasizing that the deployment of police force was part of their statutory duty of maintaining law and order. The Tribunal, after considering the contentions and records, found that the appellant's activities constituted a sovereign function and were not taxable services as per Circular No. 96/7/2007-ST. Consequently, the appeal was allowed, and the impugned order demanding service tax was set aside, granting the appellant consequential benefits as per the law.