Customs, Excise and Gold Tribunal - Bangalore
Kerala State Ex-Service League vs C.C.E. on 19 August, 2004
Equivalent citations: 2004(173)ELT434(TRI-BANG), 2006[3]S.T.R.400, [2007]6STT403
ORDER S.L. Peeran, Member (J)
1. The appellants claim to be a service organisation and registered as a charitable society under the Travancore Cochin Societies Registration Act, 1955 and affiliated to Indian Ex-services League, New Delhi of which the Grand Patron-in-Chief is the President of India. They have contended that the primary aim of their Society is to look after the socio-economic and welfare matters of Ex-Servicemen and their families. They provided opportunities to their members by guiding them for better placements on no profit no loss basis. They have relied on the Government of India's Notfn. No. 8-35014/4/99-98.II, dtd. 5th April, 2000, exempting their Society from the purview of Employee's Provident Funds and Miscellaneous Provisions Act, and Government of Kerala from the Employees State Insurance Act. As per Circular No. SB-6/13570/85, dtd. 10th June, 1985 the Directorate of Sainik Welfare, Government of Kerala has approved them as the sole agency for providing security persons to the Government departments, undertakings and public authorities. They are exempted from Income-tax as per certificate No. 2/2001-02-1(Div).1/TVM, dtd. 17-04-2001. Therefore, they state that their organization functions purely in a non-commercial field as Charitable Organisation. They have challenged the impugned orders levying them with service tax under the category 'security agency' as defined under Section 65(40) of the Finance Act, 1994. The definition under the said category reads as follows : -
"Security agency means any commercial concern engaged in the business of rendering services relating to the security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation, detection or verification, of any fact or activity, whether of a personal nature or otherwise, including the services of providing security personnel."
2. It is argued by the ld. Counsel appearing for the appellants that the appellants are not a commercial concern and not earning profits. The commercial concern is a business concern which should earn profits and as the appellants are not preparing balance sheet of profit and loss account, the activity is a pure charitable and social activity and cannot be considered as a commercial activity for imposing service tax. He relies on the judgment of the Apex Court rendered in the case of Commissioner of Sales Tax v. Sai Publication Fund [Vol. 126 Page 288] and that of State of Tamilnadu and Anr. v. Board of Trustees of the Port of Madras [Vol. 114 Page 520] wherein the definition of 'business' has been gone through into detail and the Apex Court after due consideration of various judgments has held that in order to hold a concern to be carrying on business activity then it has to have profit motive which is relevant where the person carries on trade, commerce, manufacture or adventure in the nature of trade, commerce, etc. He submits that in the light of these two rulings their activity is not a commercial activity and therefore the service tax is not leviable. He has filed two copies of contingent bill drawn to show that appellants are made directly by the KSRTC to the security guards and appellants are not receiving the salary for payment. He also relied on the copies of acquaintance role of security guard wherein the payments made to guards is indicated. He also referred to the provisions of the agreements executed with KSEB to show that appellants are only a service organisation and they are not making any profits as a business concern. He submits that the only ground given by the authorities below is that they are participating in tenders and for that reason it has to be held as a commercial concern. He submits that they are not bidding in any tenders and in terms of the Government's Circular they have entered into agreement with the respective state organisations for providing the services, which are not commercial in nature.
3. Ld. JDR submitted parawise comments and relied on the same.
4. On a careful consideration we are of the considered view that the matter has to go back to the original authority for de novo consideration. The only ground given by both the authorities is that appellants are making bids, and filing tenders and on that ground it has been held to be a commercial activity. In terms of the two Supreme Court judgments cited before us, we note that the authorities are to see as to whether the appellants are making profits as a business concern. The matter has to be examined in the light of the Apex Court judgment cited before us and the documents placed before us by the appellants. The appellants are required to see in the first instance from these documents and the judgments of the Supreme Court whether it could be concluded as to whether they are a business concern or not with a profit motive. In case if the appellants are able to establish that they are not a commercial concern making any profits in terms of the definition of the term 'security agency', then they cannot be brought within the ambit of the definition of 'security agency'. Therefore, the matter is remanded back to the original authority for de novo consideration. The original authority shall examine all the documents and the citation referred to and pass a detailed order after granting an opportunity to the appellants and permitting them to file the documents. Appeal is allowed by remand. Ordered accordingly.