Police department providing security services exempt from service tax under Section 65(105) (w) Finance Act, 1994

The Appellate Tribunal CESTAT Ahmedabad ruled that the appellant, a police department providing security services, was not liable for service tax under Section 65(105) (w) of the Finance Act, 1994. The Tribunal considered past judgments where police departments were held exempt from service tax on security services, leading to the conclusion that the appellant's services were also exempt. Consequently, the demand for service tax was deemed unsustainable, and the impugned order was set aside, allowing the appeal.

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Issues:
Whether the appellant providing security services is liable for service tax under Section 65(105) (w) of the Finance Act, 1994.

Analysis:
The appellant was engaged in providing services like escort of cash, security to individuals, and security for events. The department claimed that the appellant was providing "Security Agency Services" and thus liable for service tax. The appellant argued that as a police department, they provide security in the interest of the public and maintain law and order, making their services exempt from service tax. The appellant cited judgments where police departments were held not liable for service tax on security services. The Tribunal, after considering the arguments and judgments, concluded that the issue was settled law based on the cited judgments. Therefore, the demand for service tax was deemed unsustainable, and the impugned order was set aside, allowing the appeal.

Judgment:
The Appellate Tribunal CESTAT Ahmedabad, consisting of Mr. Ramesh Nair, Member (Judicial), and Mr. Raju, Member (Technical), heard the appeal. Shri N.V. Suchak represented the appellant, and Shri T.K. Sikdar represented the respondent. Mr. Ramesh Nair delivered the order on 13.07.2018. The Tribunal found that the appellant, as a police department providing security services, was not liable for service tax based on established legal precedents. The impugned order was set aside, and the appeal was allowed.

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