2026-VIL-96-MAD-ST
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SERVICE TAX High Court Cases

Service Tax – Levy of service tax on services provided by Police Commissionerate under statutory functions - Levy of service tax on the services provided by the Commissionerate under the Tamil Nadu District Police Act, 1859 and the Chennai Police Act, 1888. The Commissionerate contended that the services rendered were in the nature of sovereign functions and hence not liable to service tax - Revenue authorities argued that the services were provided to both governmental and private entities and hence would fall within the ambit of 'security agency services' under the Finance Act, 1994 - Whether the services rendered by the Commissionerate under the relevant statutes are in the nature of sovereign functions and hence outside the scope of service tax under the Finance Act, 1994 – HELD - The services rendered by the Commissionerate were in the nature of sovereign functions, as they were carried out in exercise of the statutory duties under the Tamil Nadu District Police Act, 1859 and the Chennai Police Act, 1888, regardless of whether the services were provided to governmental or private entities. The police department has a statutory and mandatory duty to maintain public peace and order, and hence the charges collected for the exercise of such sovereign functions cannot be considered as 'security agency services' liable to service tax – Further, for the period prior to June 2012, the Government was not included within the definition of 'person' liable to service tax under the Finance Act, 1994. Therefore, the Order-in-Original levying service tax on the Commissionerate for the period in question is set aside. However, the question of taxability of the services for the period post-June 2012 is left open, as the definition of 'person' was subsequently amended to include the Government – The writ petitions are allowed
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