HC Upholds RCM On Security Services – No Violation Of Articles 14 Or 19

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  • Last Updated on 22 August, 2025

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RCM on security services HC ruling

Case Details: Eagle Security & Personnel Services vs. Union of India - [2025] 177 taxmann.com 549 (Bombay)

Judiciary and Counsel Details

  • M. S. Sonak & Jitendra Jain, JJ.
  • Shreyas Shrivastava & Saurabh R. Mashelkar, Advs. for the Petitioner.

Facts of the Case

The petitioner, a proprietorship entity rendering security services, challenged the constitutional validity of the classification of suppliers under the Reverse Charge Mechanism (RCM) introduced with effect from 01-01-2019. Prior to that date, GST on security services was levied under the forward charge mechanism, making the supplier liable to pay tax under the head “Investigation and Security Services.”

Notification No. 29/2018-Central Tax, dated 31-12-2018, amended Notification No.13/2017-Central Tax, dated 28-06-2017, to shift liability to the recipient under RCM if the supplier was any person other than a body corporate. The petitioner contended that such classification discriminated between proprietorship entities and body corporates, violated Articles 14 and 19 of the Constitution, and restricted the ability to claim Input Tax Credit (ITC), since services supplied under RCM were treated as exempt in the hands of the proprietorship entity, creating higher costs.

The petitioner sought to have sections 17(2) and 17(3) of the CGST Act read down to include proprietorship entities along with body corporates. The matter was accordingly placed before the Bombay High Court.

High Court Held

The Bombay High Court held that the classification of suppliers into body corporates and others was reasonable, based on an intelligible differentia having a rational nexus with the object of the legislation, and was therefore not violative of Articles 14 or 19. The Court observed that a person whose services are liable under RCM does not have output tax liability, and hence the input tax credit cannot be availed, while the recipient of services can claim ITC. Sections 17(2) and 17(3) could not be read down to include proprietorship entities alongside body corporates, as the legislative policy to cover certain classes under RCM is within the wisdom of the legislature and not easily subject to judicial interference.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied