Traffic Police Not a “Person” Under Service Tax Law Before 2012: CESTAT Rules No Service Tax on Crane Hire [Read Order]
CESTAT held that the Delhi Traffic Police was not a “person” under the service tax law before 2012, making crane hire during 2009-2012 non-taxable
The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that service tax cannot be levied on the hiring of cranes supplied to the Delhi Traffic Police during 2009-2012, since the Traffic Police was not considered a “person” under service tax law before 2012.
Your Ultimate Guide to India’s Latest Income Tax Laws - Click here
Surinder Aggarwal, now operating as New Royal Motor, had supplied cranes on hire to the Delhi Traffic Police for towing and related purposes. The department treated this as a taxable service under the category of “supply of tangible goods” and demanded service tax. The Commissioner (Appeals) upheld the demand, after which the appellant approached the Tribunal.
The appellant’s counsel argued that the Delhi Traffic Police could not be treated as a “person” for the relevant period, since the definition of “person” in service tax law was introduced only from 1 July 2012.
The counsel relied on earlier tribunal decisions in Deputy Commissioner of Police, Jodhpur v. CCE Jaipur-II and DIG of Police v. CCE Bhopal, where it was held that services provided by or to State police departments were not taxable under the pre-2012 framework.
They also cited the Constitution Bench judgment in State of West Bengal v. Union of India where it was explained that the State cannot be treated as a “person” unless the law specifically says so.
The revenue counsel argued in support of the Commissioner’s order and relied on the Kerala High Court’s decision in Secretary to Government, Department of Agriculture, Kerala v. Union of India, where service tax was upheld on services provided to government departments.
The bench comprising Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) observed that for the period in dispute, the Finance Act did not define the term “person,” and the meaning under the General Clauses Act applied.
Under that definition, the State and its instrumentalities, including the Police, were not treated as “persons.” The tribunal pointed out that the broader definition of “person,” which included Government and local authorities, was introduced only from 1 July 2012 and could not apply retrospectively. The Kerala High Court decision relied upon by the revenue related to the post-2012 period and was not applicable here.
The tribunal explained that since Delhi Traffic Police was not a “person” under the law for the period 2009-2012, no service tax could be levied on the hiring of cranes. The order of the Commissioner (Appeals) was set aside, and the appeal was allowed.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
