Statutory security deployment by a State agency falls outside security agency service tax under the Finance Act.

A State Government agency deploying personnel for security-related duties to public sector undertakings was treated as outside the scope of a commercial "security agency" under the Finance Act, 1994. The Tribunal relied on its earlier view that statutory activity by a State agency is not the business of providing security services, together with departmental circulars treating the collections as statutory fees deposited in the government treasury and a jurisdictional High Court ruling on identical facts. On that basis, the demand was not sustainable and no service tax was leviable.

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Issues: Whether the activity of the Punjab Home Guards in providing security-related deployment to public sector undertakings was taxable as "security agency" service under the Finance Act, 1994.

Analysis: The activity had already been held by the Tribunal to be outside the scope of a commercial security agency where it is undertaken by a State Government agency in discharge of statutory duties. The Tribunal also relied on the departmental circular position that the amounts collected by the police/home guards are statutory fees deposited in the government treasury, and on the jurisdictional High Court decision in identical facts. On that basis, the issue was treated as no longer res integra and the earlier demand could not be sustained.

Conclusion: The activity was not covered by the definition of "security agency" under Section 65(94) of the Finance Act, 1994, and no service tax was leviable; the appeal succeeded.

Ratio Decidendi: A State Government agency performing statutory duties and not engaged in the business of providing security services does not fall within the definition of "security agency" for service tax purposes.

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