Finance ministry sources said the Central Industrial Security Force will have to pay service tax as it comes under the category of security agency services of the Finance Act of 1994 under which only private security agencies are currently paying tax.

The CISF, which has now been brought under the ambit of service tax, is finding hard to come to terms with the decision even as an officer of the force termed the move as demoralising.

While top officials of the force, which protects the countrys vital installations like nuclear plants and airports, say the service tax is to be paid by its clients and not by CISF and hence there is nothing to be worried about, middle level and ground personnel say they are upset on being compared to guards of other private security agencies.

Finance ministry sources said the Central Industrial Security Force (CISF) will have to pay service tax as it comes under the category of security agency services of the Finance Act of 1994 under which only private security agencies are currently paying tax.

This new rule is very demolarising. We are a paramilitary force which functions completely under the control of the home ministry. We dont provide security services but do our duty as mandated by the government. We are not like the guards that you find in offices and houses, an officer of the force said.

Service Tax Authority sources said the force is yet to register with them and hence notices have been sent again asking the 1.2 lakh personnel strong force to do so soon.

The CISF, which was recently mandated to provide security to private establishments and government installations under a cost realisation scheme wherein the firms bears all the cost including salary, weapons and accommodation of personnel posted there.

We dont make profits and we cover establishments which genuinely require special protection and that too after a full security review undertaken by the home ministry, another official said.

The Union home ministry recently asked the force to pay service tax from the current fiscal, thus bringing an end to a series of discussions over the last few years between the MHA and finance ministry as to whether an armed wing of the government should be considered as a service provider.

As per the Act, security agency means any person engaged in the business of rendering services relating to the security of any property, whether movable or immovable, or of any person...including the services of providing security personnel.

The then finance minister, P Chidambaram, had contended that since the force was providing security to installations on chargeable basis, it should pay the service tax.

However, the CISF had opposed the move, saying it was an arm of the government and hence should not be considered as a service provider because it comes under the direct control of the MHA just like other paramilitary forces.