Police Security Services Exempt From Service Tax Prior To June 2012: Madras High Court

The Madras High Court has allowed a plea seeking service tax exemption for police guard charges and escort duties, holding that such activities carried out by the State Police do not fall within the service tax net prior to 1 June 2012.

A Division Bench of Justice Anita Sumanth and Justice Mummineni Sudheer, in a judgment delivered on 12 December 2025, examined service tax liability by referring to the definition of 'person' under the General Clauses Act.

They noted that the Service Tax law included the Government within the definition of 'person' only with effect from 1 June 2012. Therefore, the Government was not liable to service tax during the period in dispute, namely May 2006 to December 2011.

In this context, the Court observed:

“24. However, we find that the definition of 'person' upon whom liability of service tax was to be fastened, as it stood for the period in question, being May, 2006 to December, 2011, did not include the Government.”

The case arose from a service tax demand raised in respect of Government Orders issued by the State of Tamil Nadu, under which police personnel were deployed for security and escort duties.

Service tax was sought to be levied on the activities of the Greater Chennai Police Commissionerate, carried out under various State police enactments, including the Chennai Police Act, 1888 (formerly the Madras City Police Act, 1888).

The Police Commissionerate contended that security services performed in exercise of its statutory powers under the Tamil Nadu District Police Act, 1859 and the Chennai City Police Act, 1888 constituted sovereign functions and therefore lay outside the scope of service tax.

It was also pointed out that, in 2012, the Commissionerate had made a representation to the Secretary to the Government, Ministry of Home Affairs, New Delhi, seeking clarification and exemption from service tax.

The Court also relied on the 2018 Supreme Court decision in Dy. Commissioner of Police, Jodhpur, which held that deployment of police forces for maintaining law and order is a sovereign function and cannot be taxed as a security agency service.

The Madras High Court, however, left open the question of service tax liability after 1 June 2012, when the Government and local authorities were expressly included within the definition of 'person' under the service tax law.

For Appellant: Advocate R.Anishkumar

For Respondent: Senior Panel Counsel K.Mohana Murali