In Mumbai Police vs. Commissioner of Service Tax, the West Zonal Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that Service Tax Demand on the charges recovered by Police for providing security services as unsustainable.
Mumbai Police, the appellants provide security service to banks, individuals, security for cricket matches and other functions. They recover charges for the service they provide to the beneficiaries of such service. A show cause notice demanding Service Tax on the charges recovered by the appellant was served to them by the Revenue. According to the Revenue, the services provided by the appellant falls under the category of ‘Security Agency Services’ and therefore the charges recovered for the service was liable to service tax. The demand was confirmed by the adjudicating authority and a penalty was imposed.
The appellants preferred an appeal before the CESTAT. The Counsel for the Appellant, Mr S.S Gupta CA, relied on Dy. Commissioner of Police, Jodhpur vs. CCE & ST in which it was held that Police perform the sovereign function and the services rendered by them is not liable to Service Tax. The Counsel for the Respondent reiterated the findings of the adjudicating authority.
After considering the facts and arguments, the Tribunal comprising of Judicial Member Ramesh Nair & Technical Member Raju observed that the issue was no more res-integra and that it has been already dealt by various judgments of the Tribunal. They reproduced the decision of the Tribunal in Dy. Commissioner of Police, Jodhpur vs. CCE & ST which has held that the service tax demand is unsustainable. Consequently, the order by the adjudicating authority was set aside and the appeal was allowed.
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