2019 (3) TMI 1324 - AT - Service Tax

Levy of service tax - activity, being Special Project under Swaranjayanti Gram Swarojgar Yojana (SGSY) of the Central Govt., which is a Government of India Centrally Sponsored Scheme along with the State Govt. - assessee is registered with department, and also under the Societies Registration Act - Held that - The Board have clarified vide Circular No. 125/7/2010-ST dated 30th July 2010 read with Circular No. 127/09/2010-ST dated 16th August 2010, wherein it have been clarified that grant released by the Central Government under a Centrally Sponsored Scheme, cannot be presumed as consideration for providing a taxable service. Accordingly, there is no question of levy of service tax on such activity for which amount is received by way of grant in aid - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Whether the assessee, registered under the Societies Registration Act, is liable to pay service tax on their activity funded by the Government of India under a Centrally Sponsored Scheme.

Analysis:
The only issue in this appeal was whether the assessee, registered with the department and under the Societies Registration Act, was liable to pay service tax on their activity funded under a Centrally Sponsored Scheme by the Government of India. The funds were received from the Government of India, Ministry of Rural Development for a Special Project under the Swaranjayanti Gram Swarojgar Yojana (SGSY) along with the State Government. The Board had clarified through Circulars that grants released by the Central Government under such schemes cannot be considered as consideration for providing a taxable service. Therefore, the Tribunal found that there was no basis for the levy of service tax on activities funded by grants in aid. Consequently, the impugned order was set aside, and the appellant was granted consequential benefits as per the law. The decision was dictated and pronounced in open court by the Tribunal.