2013 (10) TMI 1325 - AT - Service Tax

Waiver of pre deposit - Commercial Training or Coaching service - Held that - Prima facie discern no nexus between the grants/donations to the petitioner either from M/s. MSD Pharmaceuticals Pvt. Ltd. or from Govt. Departments and medical professionals, who are provided the specialised diabetes management training who are the recipients of the commercial training or coaching service, provided by the petitioner. In the absence of such nexus, the inference in the adjudication order that the donations must be included in the gross taxable value for taxable services provided by the petitioner, is prima facie unsustainable, in view of the Board Circular dated 16-8-2010 - strong prima facie case in favour of the petitioner and grant waiver of pre-deposit in full and stay all further proceedings pursuant to the adjudication order, pending disposal of the appeal - Stay granted.

Summary

Issues:
Service tax demand on grants/donations received for providing commercial training or coaching service.

Analysis:
The appellant, as the assessee, challenged the adjudication order confirming a Service Tax demand of Rs. 1,21,44,142/-, along with interest and penalties, on grants/donations received for providing commercial training or coaching service. The appellant relied on Board Circular No. 127/09/2010-S.T., which stated that grants-in-aid received by charitable foundations should not be considered as consideration for training services subject to Service Tax, as there must be a nexus between the grants/donations received and the taxable activity/service provided. The adjudication order failed to establish any nexus between the grants/donations received from M/s. MSD Pharmaceuticals Pvt. Ltd. and the Ministry of Health and Family Welfare, and the medical professionals receiving specialized diabetes management training. This lack of nexus led the Tribunal to conclude that the inclusion of donations in the taxable value for services provided was unsustainable, as per the Board Circular.

The Tribunal found that there was no evidence to support a connection between the grants/donations received by the appellant and the medical professionals undergoing specialized diabetes management training. Consequently, the Tribunal held that there was no prima facie nexus between the donations and the taxable services provided by the appellant, as required by the Board Circular. Therefore, the inference made in the adjudication order, including the donations in the taxable value, was deemed prima facie unsustainable. Based on this analysis, the Tribunal concluded that there was a strong prima facie case in favor of the appellant and granted a waiver of pre-deposit in full, staying all further proceedings pending the appeal's disposal. The application was disposed of accordingly, favoring the appellant.