NO SERVICE TAX ON AMOUNTS NOT RELATED TO TAXABLE SERVICES

[Meenu Garg]

 Service tax is payable only on the amount received or receivable in relation to taxable service. Thus if any other amount is charged which is not for taxable service provided or to be provided then no service tax will be payable on such charge.

This can be further clarified by followings, 

The cash discounts and incentives received by an advertising agency from media is not includible in the 'value' as these have no relation to services of advertising agency provided.

As per the decision of CESTAT in Aditya College of Competitive Examinations Vs CCE Visakhapatnam [2009 (4) TMI 134 - CESTAT, BANGALORE], the amount of mess charges collected from students had no nexus with the coaching activity. Therefore the mess charges could not be included in the value of commercial training or coaching service provided.

The Tribunal, in Hotel Mela Plaza Vs. CCE [2005 (1) TMI 2 - CESTAT (NEW DELHI)], held that the amount of service charges charged by the mandap keeper from the client which was later distributed as tips to the employees. and it was held that tax was payable on the gross amount charged to the customers and hence would include the 'service charges' also.

Donations and grants-in-aid received by charitable institution from different sources for conducting training courses is not 'consideration received' for coaching service provided.

Target incentives and gifts received from principal and not billed to the clients are not includible in assessable value.