Statutory police guard charges are not taxable as Security Agency Service when levied by law and credited to the treasury.

Charges recovered by the police for providing guards to banks and other commercial concerns under the Rajasthan Police Act, 2007 and the Rajasthan Police Rules, 2008 were treated as user charges levied under statutory authority and credited to the Government treasury. Because the activity formed part of the police's mandatory public duties rather than a business of rendering security services, it did not amount to consideration for a taxable Security Agency Service. A CBEC circular was also relied on for the principle that sovereign or public authorities discharging statutory functions are not liable to service tax when the fee is imposed by law and collected for the treasury.

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Issues: Whether police charges recovered for providing guards to banks and other commercial concerns under statutory authority constitute taxable service under the category of Security Agency Service.

Analysis: The activity of the police was examined in the context of the statutory scheme under the Rajasthan Police Act, 2007 and the Rajasthan Police Rules, 2008. The charges were levied as user charges under Section 46 of the Rajasthan Police Act, 2007, and the amounts collected were deposited in the Government treasury. The service was found to be part of the police's statutory and mandatory obligations, and not an activity carried on as a business of rendering security services. The CBEC circular relied upon by the Department itself clarified that services performed by sovereign or public authorities in discharge of statutory functions are not liable to service tax when the fee is levied under law and the collection is credited to the treasury.

Conclusion: The charges collected for providing police guards under the statutory framework were not exigible to service tax as Security Agency Service.

Ratio Decidendi: Amounts recovered by a sovereign or public authority for discharge of a statutory function, when levied under law and credited to the Government treasury, do not constitute consideration for a taxable business service.

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