TMI Blog2014 (11) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have been issued. - the notice dated 20th November, 2013 is quashed and set aside. - Decided in favour of assessee. - W.P. No. 48 of 2014 - - - Dated:- 20-11-2014 - I.P. MUKERJI, J. Mr. Binod Poddar, Sr. Adv., Mr. Sumit Gadodia, Mr. Somak Basu for the petitioner Mr. S.S. Banerjee, Mr. K.K. Maity, Mr. R. Bhardwaj for the respondent JUDGEMENT I.P. MUKERJI, J. The writ petitioner is a public limited company. Its registered office is at 4, Mangoe Lane, Kolkata-1. It is engaged in the business of tea. It has tea plantations in the State of Assam. Along with this company there are others who own tea plantations in that state. Learned senior counsel for the writ petitioner Mr. Poddar tells me that there is a 200 kilometre corridor in Assam where these tea plantations are situated. The area is disturbed. It is highly volatile. There is a constant threat of damage to the tea gardens, the establishments connected with them and their owners and staff from miscreants. Their acts of vandalism are often carried out with terrorist like precision. In those circumstances the consortium of owners of tea gardens approached the government of Assam for protection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irected to furnish their compliance report on the above issue. According to the writ petitioner, no service tax is chargeable for the service in question. At this stage a close look at the Finance Act, 1994 by which service tax was introduced is necessary. Section 66(B) provides that service tax shall be levied at 12% on the value of all services other than those services specified in the negative list. Section 68 clarifies that every person providing taxable service shall pay service tax at the rate specified in Section 66. Therefore, these two sections suggest that all services other than those specified in the negative list are taxable services and exgible to service tax. Now, what are services in the negative list? Section 66(D) provides the list. It inter alia mentions the services rendered by the government, except certain categories of service specified therein. An exception is support services as provided in 66 (a) (iv) of the Act. Support services are defined in Section 65 (B) (49) of the Act as follows:- (49) support services means infrastructural, operational, administrative, logistic, marketing or any other support of any kind comprising func ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws, enforce them and so on. The state has obligations with regard to maintenance of law and order, peace, prevention of crime in the tea growing and manufacturing area of the state [see list II entry1 of the 7th schedule to the Constitution of India. This part of maintenance of internal security obligations of the State in the tea plantation areas have been delegated by it to the AISF. Discharging sovereign functions by the state cannot be equated with providing support services by it. A State can never charge any tax for discharge of a sovereign function. Hence it cannot levy any tax for rendering of services by the AISF. This has been recognised by the said guidance note of the department, it was submitted. Mr. Poddar went to the extent of submitting that the arms that are entrusted with the members of this force are used by army personnel and are not available to an ordinary security force. MY FINDINGS Very astonishingly, the basic foundation of the case of the petitioner has not been specifically denied in the affidavit-in-opposition. This foundation is that the force employed by the State of Assam in the tea plantations in Assam discharges the sovereign function ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er by the members of the Force. The justification for creation of the Force instead of entrusting the normal machinery of the Police administration to deal with the threats of the extremists violence in so far as Tea Gardens are concerned, has not been spelt out before the Court by the State authorities. The necessity of providing round the clock security cover to the Tea Gardens located in the far-flung and remote areas of the State and to have an exclusive force to deal with extremists threats to a key industry may have been the reasons behind the MOU giving birth to the Force. Whatever the justification and reasons may have been, the fact remains that the members of the Force under the direct operational and disciplinary control of the Police authorities are performing what are purely State functions. Even assuming the application of the Home Guards Act to the members of the Force, what is revealed is that under the Home Guards Act. Home Guards on duty are public servants and while called for duty have the same powers, privileges and protection as available to a member of the police force . That the maintenance of the security of the state was a sovereign function was emphasi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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