Case Law Details

Case Name : Supdt. of Police Vs. CCE&ST (CESTAT Delhi)
Appeal Number : S. T. Appeal No. 51854 & 51861 of 2017
Date of Judgement/Order : 02/01/2018
Related Assessment Year :
Courts : All CESTAT (748) CESTAT Delhi (264)

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:-

In both the appeals the delay is condoned for the reasons mentioned in the CoD. Appeals are admitted.

2. With the consent of both the parties, we heard the appeals on merit.

3. 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.

4. With this background, we heard Sh. Krishan Garg, ld. CA for the appellant and Sh. Sanjay Jain, ld. AR for the Revenue and perused the material available on record.

5. After hearing both parties and on perusal of record, it appears that identical issue has come up before the Tribunal in assessee’s own case (Final Order Nos. 55321 – 55348 dated 25.11.2016) where it was observed that-

“46. Payment for Police service.- The State Government may levy from any person, who carries on any such occupation, gathering, exhibition, sale, entertainment, etc. for monetary gain, as may, for the purpose of public security or for the maintenance of public peace or order, require deployment of additional police force, such user charges as may be prescribed.”

(ii) The fee collected should be levied as per the provision of relevant law.

The State Government, in exercise of powers conferred under Section 46 of the Police Act issued two notifications wherein the charges to be recovered for providing additional police force for the purpose of maintaining public security and law and order have been notified. Notification number 27 (2) Home/Gr.-6/ 84 dated 19.05.2008 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 15.01.2008 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:

1 Constable Rs 250 per day.

2 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 Section 46 of the Rajasthan Police Act, 2007 and submitted that the additional police officers are deployed at the request of any person only for the purpose of public security or for the maintenance of public peace or order. The fees levied and collected for this purpose is strictly as per the Notification issued by the State  Govt. under the above Section of the Act. The amounts so collected are mandatorily deposited into the Govt. treasury. Accordingly, they have submitted that all the conditions stipulated by the CBEC circular are satisfied and consequently the activities are to be considered as statutory function and no service tax can be levied on such fees collected for discharging the sovereign function.

The lower authorities have, however, taken the view that the activity undertaken is not in the nature of statutory duty, but an activity undertaken for a consideration which is not a statutory fee. We find ourselves unable to agree to this stand taken by the lower authorities. The police department has the mandatory duty to maintain public peace and order. For such duty, which is in the nature of sovereign function, no charges are recoverable from the citizens. In the present case, the police department has recovered fees for deploying additional police personnel on request. However, the statutory functions of the police of the State Govt. make it explicit that such activity, even at request of the other person, is to be carried out only for the purpose of public security or for the maintenance of public peace or order. The charge for deployment of such additional force is also prescribed by the statutory notification issued by the State Govt. In view of these facts, we are of the view that the activity of deploying police personnel on payment basis is to be considered as part of statutory function of the State Govt. and the fees recovered are to be considered as statutory. It is also not disputed that such amounts recovered have been deposited into the Govt. treasury.

13. On the basis of the above discussion, we conclude that 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.

14. Both sides have relied on several case laws. However, none of the cases are squarely covering the present issue of levy of service tax on State Police. Some touching upon the subject have dealt with only stay petitions. As such, we have not discussed them at length”.

6. By following our earlier order (supra), we set aside the impugned order and allow the appeals.

7. In the result, both the appeals are allowed. CoD are also allowed.

(Dictated and pronounced in the open Court).

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