P.G. Chacko, Judicial Member - In this application, the appellant seeks waiver of pre-deposit and stay of recovery in respect of service tax of Rs. 12,90,54,553 demanded under section 73 of the Finance Act, 1994 as also in respect of penalties imposed under sections 77 and 78 of the Act. The demand of tax is for the period May, 2006 to March, 2007 and the same is under two heads viz. "Security Agency" service under section 65(105)(w) of the Finance Act, 1994 and "Manpower Recruitment Agency" service under section 65(105)(k) of the Act.

2. Ld. counsel for the appellant has presented before us the facts of this case. The appellant is Security Guards Board constituted under section 6 of the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981 which Act was enacted for regulating the employment of Private Security Guards employed in factories and establishments in the State of Maharashtra and for making better provisions for their terms and conditions of employment and welfare, through the establishment of a Board therefor, and for matters connected therewith". The Board brought a scheme called "The Maharashtra Private Security Guards (Regulation of Employment and Welfare) Scheme, 2002" under section 4(1) of the said Act (hereinafter referred to as "the Scheme"). Under this scheme, the State Government implemented several welfare measures for security guards. The minimum wages and allowances payable to security guards by establishments (principal employers) to security guards were prescribed for the purpose. Where the establishments (principal employers) were already paying such wages and allowances or more than that to the security guards, such establishments were entitled to exemption from coverage of the provisions of the Act. But such establishments and security guards employed by them were also required to be registered with the Board. Other establishments which did not pay wages and allowances not less than what was prescribed under the scheme to the security guards directly came within the operation of the provisions of the Act and, consequently, they came to be liable to get themselves registered with the Board and also to have their security guards registered with the Board. These establishments were liable to remit to the Board the amount required in every month for payment of wages and allowances to the security guards. The above scheme also provided for a levy from these establishments to meet the expenses of implementation of the scheme. Accordingly, the registered establishments were required to make monthly remittances to the relevant fund maintained by the Board. The costs of implementation of the scheme were defrayed from this fund maintained by the Board.

3. To put it in a nutshell, every such establishment, to which the provisions of the Act were applicable, was required to deposit with the Board (a) the wages and allowances to be disbursed to the security guards in every month and (b) their share of the cost of implementation of the scheme per month. The demand of service tax presently under challenge is on these remittances made by various registered establishments to the Board during the period May, 2006 to March, 2007. In adjudication of a show-cause notice dated 18-10-2007, the ld. Commissioner confirmed the demand of service tax under the two heads viz. 'Security Agency' service and "Manpower Recruitment Agency" service and imposed the penalties.

4. Ld. counsel submits that the Board was discharging only a sovereign function by way of implementing the scheme under the Act and, therefore, it cannot be called upon to pay any service tax. To buttress this argument, the ld. counsel has taken us through various provisions of the Act as also various provisions of the Rules framed thereunder besides the provisions of the scheme. The endeavour is to show that the Board is under the direct control and supervision of the State Government and that their functions are in the nature of