Police security charges for bank guards are not taxable as Security Agency Services when collected as statutory user fees.

Collection of security charges by the police for providing guards to banks was not taxable as Security Agency Services because the activity formed part of the police's statutory obligations rather than a commercial security business. The charges were recovered as user charges under the relevant police law and remitted to the Government treasury, bringing the case within the CBEC circular on fees collected by sovereign or public authorities for statutory functions. Service tax was therefore not leviable and the demand could not be sustained.

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Issues: Whether collection of security charges by the police for providing guards to banks is exigible to service tax under the category of Security Agency Services.

Analysis: The activity of providing police guards was held to be part of the police's statutory obligations and not an activity carried on as a business of providing security. The amounts were recovered as user charges under the relevant police law and deposited in the Government treasury. The conditions stated in the CBEC circular governing taxability of fees recovered by sovereign or public authorities for statutory functions were satisfied, and the circular was binding on the department.

Conclusion: Service tax was not leviable under Security Agency Services on the charges collected by the police, and the demand could not be sustained.

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