The Commissioner Of Police vs. Union Of INDIA

Held

The Court noted that a similar issue was considered in a previous writ petition (W.P(MD)No.18917 of 2022) decided on 25.06.2024. In that case, while prima facie the issue appeared to be covered in favour of the petitioner, the Court found it imprudent to allow the writ petition straightaway due to the availability of an alternate remedy. The Court therefore disposed of that writ petition by granting liberty to the petitioner to file a statutory appeal before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, within 60 days. The CESTAT was directed to entertain the appeal and dispose of it on merits after giving due opportunity to the government. Following this precedent, the present writ petition was disposed of with similar directions, granting the writ petitioner liberty to file a statutory appeal before the CESTAT within 60 days, which the CESTAT shall entertain and decide on merits.

Facts

The petitioner, the Commissioner of Police, Madurai City, filed a writ petition challenging orders-in-original dated 26.04.2013 and 31.03.2015, modified by an order dated 23.03.2016 passed by the Commissioner of Central Excise (Appeals). The petitioner was charged service tax for providing security services to banks and private financial institutions for cash transportation to ATM centres. The petitioner contended that these activities constitute sovereign functions and are outside the purview of service tax under the Finance Act, 1994, as they are undertaken under the provisions of the Tamil Nadu District Police Act, 1859, and the Chennai City Police Act, 1888. The revenue authorities initiated these proceedings for levy of service tax.

Key Issues

1. Whether the activities of providing security services for cash transportation by the police department to banks and private financial institutions, undertaken under statutory provisions, are outside the purview of Union levy of service tax under Chapter V and VA of the Finance Act, 1994? The petitioner argued that the services rendered are sovereign functions performed under specific state police acts and government orders, thus falling outside the scope of service tax. They sought a declaration to this effect and instructions to subordinate officers not to levy service tax. The respondents (revenue authorities) initiated the demand for service tax based on the nature of the services provided. The judgment does not explicitly record arguments from the revenue side beyond the fact that they initiated the demand.