TaxTMI 
TaxTMI 
2026 (1) TMI 1397
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....definition does not necessarily mean that service provider must have profit motives or it requires to be provided with commercial concern or otherwise and therefore, even if there is no profit motives service tax can be demanded under the said category. 3. Though nobody appeared on behalf of the appellant, we have perused the appeal memorandum filed by the appellant, wherein, they have, interalia, taken the ground that security provided to M/s Indian Bank was in pursuance of Home Department's instructions and similarly security provided to one Mr. Mohan Babu was as per the order of the Government and hence the said services were nothing but sovereign and statutory function of the Police Authorities. Therefore, the sovereign functions of the Government are not liable to imposition of service tax. He has relied on the CBEC Circular dated 18.12.2006 and 23.08.2007 in support that any activities assigned to and performed by a sovereign/public authority under the provision of any law did not constitute taxable service and any amount/tax collected are not to be treated as consideration for the purpose of service tax. He has relied on certain case laws. He has also contested the invoca....
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.... charges recovered by any sovereign or public authority for carrying out any statutory function will not be liable for service tax fees if three conditions are fulfilled. 16. The first condition is that the statutory authority must perform a duty which is in the nature of statutory or mandatory obligations to be fulfilled in accordance with law. We have no doubt that the police has a statutory duty to provide security. The Second condition is that the fee should be collected as per law. Section 46 of the Police Act provides for the State Government providing Police Force for fee for user charges in some cases. The present demand is on the amounts collected as user fee which are levied upon the Section 46 of the Police Act, and therefore, the second condition is also fulfilled. The third condition is that the amount so collected must be deposited into the Government treasury. There is no doubt in the entire proceedings that the amount so received was deposited in the Government treasury. In view of above, we find that all conditions required in the above circular of CBEC are fulfilled. Therefore, no service tax chargeable under Security Agency Services upon the Appellant. T....
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.... "Security Agency' means any person engaged in the business of rendering services relating to the security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation, detection or verification, of any fact or activity, whether of a personal nature or otherwise, including the services of providing security personnel." 9. The other relevant circular issued by C.B.E. & C. is Circular No. 89/7/2006-S.T., dated 18-12-2006 is reproduced below: "The activities assigned to and performed by the sovereign/public authorities under the provisions of any law are statutory duties. The fee or amount collected as per the provisions of the relevant statute for performing such functions is in the nature of compulsory levy and are deposited in the Govt. Account. However, if a sovereign or public authority provides a service, which is not in the nature of statutory activity and the same is undertaken for consideration (not a statutory fee), then in such cases service tax would be leviable as long as the activity undertaken falls within the scope of a taxable service as defined." 10. The appellants have argued tha....
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.... activity for the purpose of gaining something out of the said activities, but the same has been used in terms of the work. He has accordingly held that as long as consideration is being received by police for providing security service, it is to be presumed to be in the nature of business. The term "business" connotes that it is an activity undertaken with the intent of earning profit. The charges recovered by police are in the nature of cost recovery for the additional police force deployed on request for maintaining security and law and order. It is also the submission of the police department that the deployment of additional police force at the request of banks and other institutions or other events has been done only for maintenance of law and in the absence thereof there could arise major security issues in relation to person or property. In the light of the submissions made, we are of the view that the activities undertaken by the police, for which charges have been recovered, cannot be held to be in the nature of business activity. 12. Now, we turn to the C.B.E. & C. Circular No. 89/7/2006-S.T., dated 18-12-2006. The circular has indicated under what cond....
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....2)Home/Gr.-6/84, dated 19-5-2008 which notifies the charges for police arrangement in Central Government offices/institutions/banks and other organizations, and notification number F.1(K)(16)Gr.-2/05, dated 15-1- 2008 which notifies the charges to be recovered on providing/deploying/rendering police force for security purposes. In the notification number dated 19-5-2008, the charges fixed per day are as follows: Constable Rs. 250 per day Head constable Rs. 300 per day With this it is wide and clear that the user charges are in the nature of amount collected as per the provision of the relevant law. (iii) The amount collected is to be deposited into Government treasury. As per the requirement of the General Finance Account Rules issued by the Rajasthan State Government, the Government dues are to be collected and paid into the Government treasury. The appellant, therefore, is required to collect the usage charges and credit the same in the Rajasthan State Government treasury. The submission made by the police department in this regard is that the fees recovered by them is for provision of additional police force. They have referred to ....