Date of Introduction: 16.10.1998 vide Notification No.53/98-ST dt.07.10.1998.
“Security agency” means a 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 for watch and ward activities.
(Section 65(62) of Finance Act, 1994 as amended)
Taxable event and scope of service:
Taxable service means any service provided to a client, by a security agency in relation to the security of any property or person, by providing security personnel or otherwise and includes the provision of services of investigation, detection or verification of any fact or activity.
(Section 65(72)(w) of Finance Act, 1994 as amended)
The ambit of the term security agency is wide enough to include not only agencies rendering services of providing security but also detective agencies, which are providing confidential services in respect of say, financial credibility of any person, trade mark/ copyright infringements etc. (Ministry’s F.No.D-11/3/98- TRU dt.07.10.1998)
Value of Taxable service:
Value of the taxable service in relation to the service provided by a security agency to a client, is the gross amount charged by such agency from the client for services rendered in connection with the security of any property or per son, and includes services of investigation, detection or verification of any fact or activity including services of providing security personnel. (Section 67 of Finance Act, 1994 as amended)
No, abatement from the amount charged to the client for services rendered is available for purposes of computing the Service Tax liability. However, abatement in respect of statutory levies and taxes can be granted provided the same has some direct relation with the services rendered to the client, specifically billed to the client and is reimbursable by the client on an actual basis. Statutory levies of the kind like EPF, ESI contribution towards labour welfare fund etc. are required to be borne by all types of employers and not only security agency. Such statutory levies have no direct corelation with the services rendered to the client (in as much as the same arise out of employer-employee relationship) and are not specifically relatable to the services rendered to the client. Therefore, no abatement in respect of the such statutory levies is admissible for the purposes of computing the Service Tax liability.
(Ministry’s F.No.B-11/3/98-TRU dt.07.10.1998)
Exemption and Exclusion:
i. The services provided by the security agency in relation to the services of providing safe deposit lockers or safe vaults for security of movable property are exempted from payment of Service Tax on the gross amount charged from the client for such services, vide Notification No.56/98 ST dated 07.10.98.
ii. Out of pocket expenses which are reimbursable on actual basis, such as travelling, Boarding and Lodging expenses are not includible in the value for levy of Service Tax. The assessee is required to produce documentary evidence for the purpose.
(Ministry’s F.No.B-11/3/98 TRU dt.07.10.1998)
iii. The security agencies merely supplying labour and man power for any purposes other than providing security services are not liable for Service Tax, irrespective of the fact that they may get covered as Man power Recruitment Agency.
iv. The Security agencies during the course of their business undertake services of collection of dues from loanees, credit cardholders etc. Such services are not liable for Service Tax.
(Ref: Service Tax Through Questions & Answers, 2000-2001)
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