No Service Tax Chargeable Under Security Agency Services: CESTAT

The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that no service tax is chargeable under security agency services.

The bench of Justice Dilip Gupta (President) and P. V. Subba Rao (Technical Member) has observed that merely because the police may charge a fee, it would not become “a person engaged in the business of providing security” and, therefore, no service tax can be levied.

The petitioner/assessee, who is a Superintendent of Police, SP Office, has challenged the order passed by the Commissioner (Appeals). The Commissioner (Appeals) upheld the order passed by the Additional Commissioner to the extent it confirms the demand for service tax and orders for recovery of interest under Section 75 of the Finance Act, 1994, and also remands the matter for examining the penalties imposed under Sections 76, 77, and 78 of the Finance Act.

The issue raised was whether the collection of security charges for providing police guards to various banks for their security would entail a levy of service tax under the category of “security agency services.”.

The tribunal relied on the decision of the CESTAT in the case of Superintendent of Police, Swai Madhopur, vs. Commissioner of Central Excise, Jaipur, in which it was held that police provide security as a part of their statutory obligations. In most cases, they do not charge any fee for such security, but in some cases, they charge a fee as determined by the state government. Merely because they are charging a fee, police do not become “persons engaged in the business of providing security.”.

Counsel For Appellant: None

Counsel For Respondent: Harshvardhan

Case Title: Superintendent of Police Versus Commissioner of Central Goods and Service Tax, Excise and Customs - Indore

Case No.: Service Tax Appeal No.50390 of 2017

Click Here To Read The Order