SERVICE TAX ON SECURITY SERVICE.

[SANJEEV JADHAV]

Dear Sirs, I have one issue regarding payment of service tax on Security Service. Issue is that my relative is providing security service to Banks and Educational Institutes. Recently as per Notification No. 10/2017 dated 08.03.2017, exemption of service tax is granted only up to Education up to H.S.Ed. Cess. My query is that :-

1] If any service provided by Proprietor firm to Educational Institutes providing education both higher secondary and above higher education? In this case who should have to pay tax ? Either by Service Provider or Educational Institute ?

[Rajagopalan Ranganathan]

Sir,

Since you have stated that your relative is providing security service to Banks and educational Institute which provides both higher secondary and above higher secondary, the Educational Institute has to pay service tax on security service provided by your relative on reverse charge mechanism vide Sl. No. 8 of Notification No. 30/2012-ST dated 20.6.2012 as amended in view of the proviso inserted by Notification No. 10/2017 dated 08.03.2017,

[Himansu Sekhar]

What is the category of the institute? Body corporate or not. Please clarify. Exemption to edn institute before amendment was for auxiliary services.

[SANJEEV JADHAV]

Dear Sir, It is Educational Institute providing Education of Engineering Degree and Diploma Courses. It is Government College.

[Mr Rao]

Dear querist,

As per Mega Exemption Notification No.25/2012 – ST Dated 20.06.2012 as amended by Notification No.10/2017 Dt.08.03.2017, exemption is available to

9. Services provided,-

(a) by an educational institution to its students, faculty and staff;

(b) to an educational institution, by way of,-

(i) transportation of students, faculty and staff;

(ii) catering, including any mid-day meals scheme sponsored by the Government;

(iii) security or cleaning or house-keeping services performed in such educational institution;

(iv) services relating to admission to, or conduct of examination by, such institution.

“Provided that nothing contained in clause (b) of this entry shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent;”.

In view of the same, the above provisions would apply to educational institutions providing services by way of pre-school education and education upto higher secondary school or equivalent only. Reverse charge mechanism vide Sl. No. 8 of Notification No. 30/2012-ST dated 20.6.2012 is applicable for security services in this case. In relation to services provided or agreed to be provided by way of security services by any individual, HUF or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as body corporate, located in the taxable territory, then the recipient of the service is liable to pay 100% service tax(w.e.f 1.4.15).

AI Summary

Reverse charge mechanism: recipient educational institutions must pay service tax on security services supplied by external providers.
Security services supplied to educational institutions offering education beyond higher secondary are excluded from the auxiliary-services exemption; therefore where such services are provided by individuals, proprietors, HUFs or partnership firms to an educational institution not covered by the exemption, the recipient is liable to pay service tax under the reverse charge mechanism as set out in the relevant notification.