The Customs Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that emergency response services, including police and fire, are exempt from service tax.
The Appellant – G V K Emergency Management Research Institute has a registered Office at Secunderabad. They had centralised registration for providing taxable services under the head Business Support Service, commercial training and coaching services etc. It appeared to Revenue – DGCEI (now DGGSTI) that GVK EMRI were providing taxable services falling within the ambit of Section 65B (44) read with (51) by way of Emergency Response Service for which they have received monetary consideration but have not discharged the service tax liability thereon.
In the course of investigation, K. Marga Bandu, Executive Partner looking after finance and taxation matters appeared before the Officers on 20.01.2017 and interalia stated that they are a registered society having exemption as a charitable institution under Section 12AA (i)(b) of the Income Tax Act. It is a non-profit organisation engaging under PPP model with various State Governments for providing ‘integrated emergency response ambulance service’ free of cost to the general public through Toll-free numbers 104/108/102 from the year 2005 onwards.
The entire activity was carried out under contract with various State Governments. They have also provided emergency response service under contract with the Police for a command and control center with phone number 100 attending to Police related emergency calls from the public from April 2001 onwards. The contract for service was awarded on nomination basis and subsequently also by way of contract after tender. They were also providing training in emergency medicine with respect to basic life support and advanced cardiac life support, basic and advanced trauma life support, obstetrics (basic life course in obstetric) with affiliation to various International Organisations and especially with Stanford University for paramedics and Doctors both for inhouse training and for others. They also had a post graduate programme in APGDEC (Advanced Post Graduate Programming Diploma in Emergency Care) affiliated to Osmania University.
The bench found that the Appellant has maintained proper books of accounts and records of their transactions. Services are provided to the State Government under agreements and all the receipts were through the banking channel. The Appellant is a non-profit organisation registered under Section 12AA of the Income Tax Act 1961. Further find that the Appellant had taken suo-moto registration and were making compliance and depositing the admitted taxes. Further find that the appellant was under bonafide belief that their services with respect to emergency response service under NHM, which is the major part of their services is exempt and has been rightly found to be exempted.
Further the two member bench of the tribunal comprising Anil Choudhary (Judicial member) and A.K Jyotishi (Accountant member) found there was no malafide on the part of the Appellant in not depositing the service tax with respect to police/fire – 100 Project, being under the belief that the same is being provided to the State Government in discharge of their statutory functions to the people at large. Further, under the comprehensive contracts, the Dial 100 Project police/fire was only a minuscule element less than 5%. Further, admittedly the appellant have deposited the service tax where they found the same to be payable before issue of SCN along with applicable interest, for which there was proposal in the SCN itself was made for appropriation.
CESTAT held that the extended period of limitation was not available to revenue and accordingly the demand was confined to the normal period of limitation. The Appellant assessee shall be entitled to consequential benefits in accordance with law.
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