2018 (4) TMI 1320 - AT - Service Tax

Police Department Exempt from Service Tax for Security Charges Under Finance Act

The Tribunal allowed the appeal filed by the police department, holding that charges collected for providing security guards were not taxable under the ... Levy of tax on State Police - Security services - Held that: - an identical issue has come - up for consideration before this Tribunal in the case of Superindent of Police Vs Commissioner of Central Excise and Service Tax, Jaipur - I [2016 (12) TMI 289 - CESTAT NEW DELHI], where it was held that police department, which is an agency of the State Govt., cannot be considered to be a person engaged in the business of running security services. Consequently, the activity undertaken by the police is not covered by the definition of Security Agency under Section 64(94) of the Act - demand set aside - appeal allowed - decided in favor of appellant. Issues:- Whether charges collected by the police department for providing security guards constitute taxable security services under the Finance Act, 1994Rs.Analysis:The appeal in question was against an Order-in-Appeal where the appellant, an agency of the M.P. Government, was providing security guards for various entities. The police department collected charges for this service, claiming it to be taxable under the Finance Act. The original adjudicating authority upheld the Service Tax demand, leading to the present appeal by the Police Department.Upon hearing, it was noted that a similar issue had been considered by the Tribunal previously in the case of Superindent of Police Vs Commissioner of Central Excise and Service Tax, Jaipur. In that case, it was established that the police department, as an agency of the State Government, cannot be considered as engaging in the business of security services. The fees collected were deemed to be for performing a statutory function and deposited into the Government Treasury, as per a CBEC Circular. Following this precedent, the impugned order demanding Service Tax on the police department's activities was set aside.In conclusion, the Tribunal allowed the appeal filed by the assessee, providing consequential relief if applicable. The decision was based on the understanding that the police department's role in providing security guards did not fall under the definition of a Security Agency as per the Finance Act, and the fees collected were considered to be for statutory functions, exempt from service tax as per the CBEC Circular.