Statutory police security charges are not security agency service consideration when collected under law and remitted to treasury.

Charges collected by the police for providing guards to banks were held not to constitute consideration for security agency services, because the activity was performed as part of a statutory duty rather than in the course of a security business. The applicable CBEC circular covered charges recovered by a sovereign or public authority for mandatory statutory functions, where the fee is collected under law and remitted to the Government treasury. Those conditions were satisfied, so service tax was not leviable and the demand failed.

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Issues: Whether collection of security charges by the police for providing guards to banks is liable to service tax under the category of security agency services.

Analysis: The police provide security as part of statutory obligations and do not become a person engaged in the business of providing security merely because a fee is charged. The relevant CBEC circular exempts charges recovered by a sovereign or public authority for carrying out statutory functions where the activity is mandatory, the fee is collected under law, and the amount is deposited into the Government treasury. Those conditions were found satisfied.

Conclusion: Service tax was not leviable on the charges collected by the police for providing guards, and the demand was unsustainable.

Ratio Decidendi: Charges recovered by the police for discharge of a statutory duty do not amount to consideration for security agency services when the collection is authorised by law and remitted to the Government treasury.

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