Whether the services provided by Police force and user charges collected from recipients of services is taxable?

PJ/CASE LAW/2016-17/3050

Case: SUPERINTENDENT OF POLICE Vs COMMISSIONER OF C. EX. & S.T., JAIPUR-I

Citation: 2015 (39) S.T.R. 817 (Tri. - Del.)

Brief Facts:Appeals are preferred against orders passed by the Commissioner (Appeals), Jaipur confirming demand of service tax on the ground that the appellant had provided security service specified in Section 65(105)(w) read with Section 65(94) of the Finance Act, 1994. These were services, prima facie, provided by the Police forces of the State of Rajasthan and user charges were collected from recipients of the services under provisions of Sections 11(2) and 46 of Rajasthan Police Act, 2007, which authorised the State to recover the costs incurred on deployment or deputation of Police officers from persons making a request for deployment/deputation and to levy on any person who carries on any such occupation, gathering, exhibition, sale, entertainment etc., for the purpose of public security or maintaining of public peace or order and who requires deployment of additional police force, by way of user charges.

Reasoning of Judgement:In the circumstances, prima facie, the consideration amounts to income of the State of Rajasthan which is excluded from the purview of the taxation jurisdiction of the Union vide Article 289 of the Constitution. We also notice that C.B.E. & C. Circular Nos. 87/7/2006-S.T., No. 96/7/2007-S.T. and No. 98/1/2008-S.T., dated 18-12-2006, 23-8-2007 and 4-1-2008 also clarify that such consideration received for providing security service by Police Forces of the State which is remitted to the Government account, is not liable to tax.
For the aforesaid reasons, they grant waiver of pre-deposit in full and stay all further proceedings for recovery of the assessed liability to tax, interest and penalty, pending disposal of appeals.

Decision:Pre deposit waived and stay granted.

Comment:The gist of case is that the services are provided by Police forces of State of Rajasthan and user charges collected from recipients of services under provisions of Sections 11(2) and 46 of Rajasthan Police Act, 2007. The consideration amounts to income of State of Rajasthan excluded from purview of taxation jurisdiction of Union vide Article 289 of Constitution of India - C.B.E. & C. Circular Nos. 87/7/2006-S.T., dated 18-12-2006, 96/7/2007-S.T., dated 23-8-2007 and 98/1/2008-S.T., dated 4-1-2008 also clarify such consideration received and remitted to Government account, not liable to tax. Hence stay is granted

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PJ/CASE LAW/2016-17/3050

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