Police department providing arms & security guards to PSUs & Govt. dept. not covered under security agency: CESTAT

Case Details: Superintendent of Police (Rural) v. Commissioner of Central Excise, Aurangabad - [2021] 131 taxmann.com 275 (Mumbai - CESTAT)

Judiciary and Counsel Details

• • Dr. Suvendu Kumar Pati, Judicial Member and Sanjiv Srivastava, Technical Member
  • Sumeet Tholle, CA for the Appellant. Dilip Shinde for the Respondent.

Facts of the Case

The appellant was a part of Maharashtra State Police force providing arms, security guards to public sector banks/undertakings and government departments under Section 13 of Police Act, 1861 on collection of actual expenditure/cost, which was called as consideration under the contract. The department issued order of demand of service tax on the ground that providing armed security guards to public sector banks/undertakings and government departments would be covered under the definition of ‘security services’ and collection of charges for the same would be liable to service tax. The appellant filed appeal against it.

CESTAT Held

The honorable CESTAT observed that the appellant was performing statutory duties and the amount so collected would have been deposited in the government treasury. The CESTAT relied on the CESTAT decision vide Final Order No. 55321-55348 dated 25-11-2016 in the case of Dy. Commissioner of Police & Others v. CCE, Jaipur & Others, where it was concluded that the police department which is in the agency of State Government cannot be considered to be a person engaged in the business of running security services. Therefore, it was held that the activity undertaken by the police would not be covered by the definition of security agency under section 64(94) of the Finance Act, 1994 and demand was liable to be set aside.