No service tax on security services provided by home guards department

The Commandant Vs Commissioner of Central Goods And Service Tax (CESTAT Delhi)

Conclusion: Home guards department was an agency of state government and therefore, could not be considered as ‘person’ engaged in the business of running security services. Therefore, there could be no levy of service tax on security services provided by the Home Guards Department as it was a part of its statutory function.

Held: Assessee was Commandant of Home Guards in the State of Rajasthan created under the Rajasthan Home Guards Act, 1963 for bridging the requirement of reserved police force required to maintain public safety, protection of persons and property and maintenance of law and order. The Home Guards department was a part of Ministry of Home Affairs, Government of Rajasthan and were called out by the Police Department for maintenance of law and order. Assessee also provide security to various Government departments and firms and charged some amounts. Revenue was of the opinion that this provision for providing the security and collection of a consideration amount to rendering “security agency service” as per Section 65(105)(w) of the Finance Act, 1994 read with Section 65(94). Revenue contended that the term “security agency service” covered any person engaged in the business of rendering the services relating to the security and, therefore, assessee was covered by this definition. Prior to 1.5.2006, the term “security agency” covered only “commercial concerns” engaged in the business of rendering services relating to security. After 1.5.2006, “any person” who provides security services gets covered under the terms security agency service. It was the case of the Revenue that the expression “any person” included a Government or local authority and, therefore, assessee had to pay service tax. It was held that assessee was the Home Guards department in the State of Rajasthan constituted under the Act providing security services to various government as well as private offices. It was noted that the Home Guards department was a part of the Ministry of Home Affairs, Government of Rajasthan and were called out by the Police Department for maintenance of law and order. It was held that the home guards department was an agency of state government and therefore, could not be considered as ‘person’ engaged in the business of running security services. Moreover, it was also observed that the fees collected by the such department was in the nature of the fee prescribed for performing the statutory function, which was being deposited into the Government treasury. Therefore, there could be no levy of service tax on such activities carried out by the Home Guards department.

FULL TEXT OF THE CESTAT JUDGEMENT

This appeal is filed against Order-in-Original No. JAI-EXCUS­002-COM-28-14-15 dated 12.12.20 14.

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