Police Department Not Liable to pay Service Tax under Security Agency Services

Supdt. of Police Vs. CCE&ST (CESTAT Delhi)

Brief facts of the case are that the appellant, Superintendent of Police of various districts in the State of Rajasthan are alleged to have been engaged in providing Security Agency Service covered under Section 65(105)(w) of the Finance Act, 1994 without having the registration for the services. As per Section 65(94) of the Finance Act, 1994, 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. The department has demanded the service tax on the said service. Being aggrieved, the present appeals are filed by the appellant.

Held

Police department, which is an agency of the State Govt., cannot be considered to be a “person” engaged in the business of running security services. Consequently, the activity undertaken by the police is not covered by the definition of Security Agency under Section 64(94) of the Act. We also find that in terms of CBEC circular on this subject, the fees collected by the police department is in the nature of fee prescribed for performing statutory function, which has been deposited into the Govt. treasury. In the light of the CBEC circular also, there can be no levy of service tax on such activities carried out by the police department.

FULL TEXT OF THE CESTAT ORDER IS AS FOLLOWS:-

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