Superintendent of Police (Rural) Vs Commissioner of Central Excise (CESTAT Mumbai)
Summary: CESTAT Mumbai allowed the appeal of Superintendent of Police (Rural) against the order confirming service tax demand of Rs.3,19,421/- on charges collected for providing armed security guards to public sector banks, undertakings and government departments. The appellant, being part of the Maharashtra State Police force, was responsible for maintenance and enforcement of public law and order and provided armed security guards under Section 13 of the Police Act, 1861 by recovering the actual expenditure/cost. The issue before the Tribunal was whether this activity constituted taxable “security services” under the Finance Act, 1994. The Tribunal observed that the appellant was performing statutory duties and the amounts collected were deposited in the Government treasury. It relied upon Circular No.89/7/2006-ST dated 18.12.2006, under which charges collected by a sovereign/public authority for statutory functions are not liable to service tax where the functions constitute statutory and mandatory obligations, the fee is levied under the relevant law and the amount is deposited into the Government treasury. The Tribunal further relied upon the CESTAT decision in Dy. Commissioner of Police & Others Vs. CCE, Jaipur & Others, where the police department, being an agency of the State Government, was held not to be a person engaged in the business of running security services. It also referred to Mumbai Police Vs. Commissioner of Service Tax, Mumbai-I [2018-TIOL-1067-CESTAT-MUM], where the Mumbai Bench had expressed the same view. Respectfully following these decisions, CESTAT allowed the appeal and set aside the impugned order.
Cases Discussed
- Dy. Commissioner of Police & Others Vs. CCE, Jaipur & Others; Final Order No.55321-55348 dated 25.11.2016
- Mumbai Police Vs. Commissioner of Service Tax, Mumbai-I; [2018-TIOL-1067-CESTAT-MUM]
FULL TEXT OF THE CESTAT MUMBAI ORDER
Superintendent of Police (Rural) is in appeal against the Order-in-Original No. NGP/EXCUS/000/APP/263-15-16 dated 31.07.2015 passed by Commissioner of Central Excise, Customs & Service Tax (Appeals), Nagpur, whereunder demand of service tax of Rs.3,19,421/-.
2. Brief facts of the case are that the appellant is a part of Maharashtra State Police force. They have statutory responsibility for maintenance and enforcement of public law and order. They are also providing arms, security guards to public sector banks/undertakings and government departments under 2ST/87054/2015 Section 13 of Police Act, 1861 on collection of actual expenditure/cost, which has been called as consideration under the contract. The issue is that whether providing armed security guards to public sector banks / undertakings and government departments is to be covered under the definition of ‘security services’ and collection of charges for the same will be liable to service tax under the Finance Act, 1994.
3. The appellant has been represented by Shri Sumeet Tholle, Chartered Accountant, and Revenue has been represented by Shri Dilip Shinde, Assistant Commissioner, Authorised Representative.
4.1 Both the sides have been heard.
4.2 After perusal of the facts on record and submissions of both sides, we are of the view that the appellant is performing statutory duties and the amount so collected is being deposited in the government treasury. CBEC has issued a Circular No.89/7/2006-ST dated 18.12.2006clarifying that wherever the charges collected by any sovereign public authority for carrying out any statutory function, the same is not liable to levy of service tax if following three conditions are satisfied:
(a) Sovereign/public authorities perform duties which are in the nature of statutory and mandatory obligation to be fulfilled in accordance with the law.
(b) The fee collected should be levied as per the provision of relevant law.
(c) The amount collected is to be deposited into government treasury.
4.3 Further, there is a CESTAT decision vide Final Order No.55321-55348 dated 25.11.2016 in the case of Dy. Commissioner of Police & Others Vs. CCE, Jaipur & Others,
3ST/87054/2015 where it was concluded that the police department which is in the agency of State Government cannot be considered to be a person engaged in the business of running security services. The CESTAT in the said decision has held that the activity undertaken by the police is not covered by the definition of security agency under Section 64(94) of the Finance Act, 1994. 4.4 The same view has been expressed by the Mumbai Bench of the Tribunal in the case of Mumbai Police Vs. Commissioner of Service Tax, Mumbai-I [2018-TIOL-1067-CESTAT-MUM].
5. Respectfully following the above decisions, the appeal is allowed and the impugned order set aside.
(Order pronounced in the open court)
