{"id":4336,"date":"2025-06-13T08:59:44","date_gmt":"2025-06-13T03:29:44","guid":{"rendered":"https:\/\/www.centaxonline.com\/blog\/?p=4336"},"modified":"2025-06-13T08:59:44","modified_gmt":"2025-06-13T03:29:44","slug":"welfare-body-deploying-security-staff-liable-for-service-tax-hc","status":"publish","type":"post","link":"https:\/\/www.centaxonline.com\/blog\/welfare-body-deploying-security-staff-liable-for-service-tax-hc","title":{"rendered":"Welfare Body Deploying Security Staff Liable for Service Tax | HC"},"content":{"rendered":"<pre><strong>Case Details: <a href=\"https:\/\/www.centaxonline.com\/latest-news-updates\/excise-service-tax\/101010000000399423\/ex-servicemen-welfare-body-providing-security-personnel-held-liable-to-service-tax-as-commercial-concern-hc\">Kerala State-ex-Services League State Committee Versus Commissioner of Central Excise Customs and Service Tax, Trivandrum (2025) 31 Centax 22 (Ker.)<\/a><\/strong><\/pre>\n<h2><em>Judiciary and Counsel Details<\/em><\/h2>\n<ul>\n<li><strong>Dr. A.K. Jayasankaran Nambiar<\/strong> &amp; <strong>Easwaran S.<\/strong>, JJ.<\/li>\n<li><strong>S\/Shri Dr. K.P. Pradeep, T.T. Biju, K.P. Kesavan Nair, Sanand Ramakrishnan<\/strong> &amp; <strong>Smt. T. Thasmi<\/strong>, Advs. for the Assessee.<\/li>\n<li><strong>Shri Sreelal N. Warrier<\/strong>, SC for the Revenue.<\/li>\n<\/ul>\n<h2><em>Facts of the Case<\/em><\/h2>\n<p>The appellant, a society registered under the Travancore Cochin Society Registration Act, 1955, was formed with the stated objective of coordinating welfare measures for the benefit of ex-servicemen and their families, as reflected in its bye-laws. It engaged in the activity of deploying ex-servicemen as security personnel to various establishments. Pursuant to this activity, it was brought under the ambit of service tax under the category of \u2018security agency\u2019 service as defined under Section 65(94) of the Finance Act, 1994.<\/p>\n<p>The appellant contended that it was not liable to pay service tax on the grounds that it was not a \u2018commercial concern\u2019, asserting that its activities were welfare-driven and lacked profit motive. It submitted that the Finance Act, 1994 did not define the term \u2018commercial concern\u2019, and argued that an entity registered as a charitable organisation and acting without a profit objective could not be treated as such. It further submitted that in certain financial years, no profit was generated from its operations. The matter was accordingly placed before the High Court of Kerala.<\/p>\n<h2><em>High Court Held<\/em><\/h2>\n<p>The High Court of Kerala held that the appellant was liable to pay service tax as a \u2018commercial concern\u2019 under Section 65(94) of the Finance Act, 1994. The Court observed that the absence of profit in specific years was not determinative, and what mattered was that the appellant had undertaken a structured activity designed to earn income through the provision of ex-servicemen as security personnel. The Court took guidance from C.B.E. &amp; C. <a href=\"https:\/\/www.centaxonline.com\/search?searchData=Circular%20No.%2086%2F4%2F2006-ST&amp;itemType=AP\">Circular No. 86\/4\/2006-ST<\/a>, dated 01-11-2006, which clarified that the commercial nature of an entity is to be assessed from the overall object and nature of its activities, rather than isolated instances of gain or loss.<\/p>\n<p>It further noted that the appellant\u2019s operations could not be equated with inherently non-commercial entities such as educational institutions. Concluding that the activities were commercial in character, the Court dismissed the appeals, upholding the service tax demand.<\/p>\n<h2><em>List of Cases Reviewed<\/em><\/h2>\n<ul>\n<li>Kerala State Ex-Service League v. Commissioner \u2014 Final Order Nos. 23012, 23014 &amp; 23017\/2017, dated 12-12-2017 by CESTAT, Bangalore \u2014 Affirmed [Paras 1, 5, 8]<\/li>\n<\/ul>\n<h2><em>List of Departmental Clarification Cited<\/em><\/h2>\n<ul>\n<li>Circular dated 10-6-1985 [Para 6]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=Circular%20No.%2086%2F4%2F2006-S.T.&amp;itemType=AP\">C.B.E. &amp; C. Circular No. 86\/4\/2006-S.T.<\/a>, dated 1-11-2006 [Para 8]<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Case Details: Kerala State-ex-Services League State Committee Versus Commissioner of Central Excise&hellip;<\/p>\n","protected":false},"author":8,"featured_media":4347,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49,51,63],"tags":[],"class_list":["post-4336","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-excise-service-tax","category-news-excise-service-tax","category-est-case-chronicles"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Welfare Body Deploying Security Staff Liable for Service Tax | HC<\/title>\n<meta name=\"description\" content=\"Kerala HC: ex-servicemen welfare society must pay security agency service tax, classed as a commercial concern under Finance Act 1994; 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