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2024 (8) TMI 91 - AT - Service TaxClassification of service - security agency service or commercial training and coaching center services - agreement for execution of project under Swarnjayanti Gram Swarozgar Yojana for placement of the rural BPL youth in Bundelkhand district of Madhya Pradesh - HELD THAT - The matter is no longer res integra as the principal bench of this Tribunal by its order in case of M/S ILFS CLUSTERS DEVELOPMENT INITIATIVE LTD. VERSUS COMMISSIONER, CUSTOMS, CENTRAL EXCISE SERVICE TAX, NOIDA 2018 (10) TMI 1007 - CESTAT ALLAHABAD have decided the issue wherein it has been held that the grant-in-aid received by the appellant from Government of India is not taxable under the category of commercial coaching or training service. The impugned order in appeal is without any merit and is set aside - appeal allowed.
Issues:
1. Taxability of training provided by the appellant under commercial training and coaching center category. 2. Valuation of service and inclusion of Central Government's contribution in taxable value. 3. Interpretation of grant-in-aid received from the Government in relation to service tax liability. 4. Applicability of the decision in the case of M/s. ILFS Clusters Development Initiative Ltd. 5. Consideration of service provider and service receiver relationship in the context of grant-in-aid received. Issue 1: Taxability of Training Services The appellant, engaged in providing security agency services, entered into an agreement for a project under a government scheme. The department argued that the training provided by the appellant falls under commercial training and coaching services. A show cause notice was issued, and charges were confirmed in the impugned order. The appellant contended that the training was not taxable under commercial training services. Issue 2: Valuation of Service The department included the Central Government's contribution in the taxable value for service tax assessment. The appellant challenged this inclusion, arguing that the grant-in-aid received should not be considered for service tax liability. The matter was adjudicated based on the interpretation of the agreement and the nature of the contributions made by the parties involved. Issue 3: Grant-in-Aid Interpretation The Tribunal referred to a previous decision regarding grant-in-aid received by the appellant from the Government. The Tribunal held that service tax is not leviable on the amount received as grant-in-aid. It was emphasized that the contribution from non-governmental agencies did not establish a service provider and service receiver relationship, leading to the setting aside of the service tax demand. Issue 4: Precedent of M/s. ILFS Clusters Development Initiative Ltd. The Tribunal cited a previous case where the tax liability on grant-in-aid received was discussed. The decision in that case was used to support the appellant's argument that service tax is not applicable to grant-in-aid received from the Government. Issue 5: Service Provider-Receiver Relationship The Tribunal analyzed the relationship between the appellant and the organizations involved in the project. It was concluded that the contributions received did not establish a service provider and service receiver relationship. The absence of a direct correlation between the contributions and specific services rendered led to the dismissal of the service tax demand. In conclusion, the Tribunal allowed the appeal, following the precedent set in previous cases and holding that the impugned order lacked merit. The decision emphasized the non-taxability of grant-in-aid received from the Government and the absence of a service provider and service receiver relationship based on the nature of contributions made.
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