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TMI Blog2024 (12) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... grants and reimbursement. The training was provided to persons Nominated by various departments of Government of Gujarat and under government of Gujarat like industry department, Education department, Tourism corporation of Gujarat, etc. Certain expenses like Hotel accommodation, Dinner charges, Local transportation, programme folder, Stationary Charges etc. were reimbursed by the government. Such services were used by appellant for providing the training. The revenue issue show cause notices demanding service tax on the said amount by invoking Rule 5 of Service Tax (Determination and Valuation ) Rules, 2006. 2.1 The Learned Counsel for the appellant pointed out that these reimbursements are of the expenses made in the in the capacity of pure Agent. Therefore, the said expenses are not includable in assessable value. He also pointed out that Hon'ble Apex Court in the case of Intercontinental Consultant Technocrats Private Limited 2018 (10) GSTL 401(SC) has clearly held that inclusion of reimbursable expenses in valuation of service is not permitted Under section 67 of Finance Act 1994. Hon'ble Apex court held that the Rule 5 of the Service Tax (Determination and Valuation) Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been received seeking clarification whether donations and grants-in-aid received from different sources by a charitable Foundation imparting free livelihood training to the poor and marginalized youth, will be treated as 'consideration' received for such training and subjected to service tax under 'commercial training or coaching service'. 2. The matter has been examined. The important point here is regarding the presence or absence of a link between 'consideration' and taxable service. It is a settled legal position that unless the link or nexus between the amount and the taxable activity can be established, the amount cannot be subjected to service tax. Donation or grant-in-aid is not specifically meant for a person receiving such training or to the specific activity, but is in general meant for the charitable cause championed by the registered Foundation. Between the provider of donation/grant and the trainee there is no relationship other than universal humanitarian interest. In such a situation, service tax is not leviable, since the donation or grant-in-aid is not linked to specific trainee or training." 4.5 In the case of Checkmate Services Pvt Ltd (Supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay service tax on the said amount. Revenue wanted to levy service tax on grant-in- aid received by the assessee in the said case. This Tribunal held that assessee therein collected grant-in-aid from Government and grant-in-aid was totally utilized for implementation of welfare scheme and nothing over and above said grant-in-aid was received by the assessee and it was concluded that the assessee therein did not receive any consideration for any service to the Government. This Tribunal had held in the said case that service tax was not leviable on grant-in-aid received by the assessee from the Government as Project Implementing Agency of Government. The learned counsel for the appellant has submitted that the amount received for the said programme on which demand of about 23 crores (approximate) of service tax was demanded is not sustainable in view of the said Final Order passed by this Tribunal as affirmed by Hon'ble Supreme Court. (ii) The learned A.R. for the Revenue has supported the impugned Order-in-Original. (iii) Having considered the submissions from both the sides, we find that the amount of around 21.12 crores (approximate) was received by the appellant from Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s any service provider-client relationship between the assessee and the governments is ruled out. It is true that the assessee had executed the governmental schemes mainly through their engineers (technocrats) but this was not enough for the revenue to bring the assessee within the ambit of "scientific or technical consultancy" as clearly held by this Bench in the case of Administrative Staff college of India (supra) (An organization rendering "scientific or technical consultancy" service under Section 65(105) (za) of the Finance Act 1994 must be a science or technology institution. The assessee-company has not been shown to be such an institution, a moreover, the revenue has failed to show that any scientific or technical advice or consultancy or assistance was rendered by the assessee to the governments. Many of the activities in question, such as micro-enterprises development, training programmes, project planning, infrastructure planning etc, are apparently in the nature of projects involving application of social science principles. The revenue has not shown that any techniques or principles of pure and applied sciences were applied in the implementation of the governmental sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., which is a Government of India Centrally Sponsored Scheme along with the State Govt. They have received the funds from Government of India, Ministry of Rural Development by its letter dated 30th Dec., 2010 issued by the Director (SGSY] as follows : Source of Funds (Rs. In lakh) Central Share 1122.19 State Share 374.06 Total 1496.25 2. We find that the Board have clarified vide Circular No. 125/7/2010-S.T., dated 30th July, 2010 read with Circular No. 127/09/2010-S.T., 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. Accordingly, we allow these appeals and set aside the impugned order. The appellant is entitled to consequential benefit in accordance with law." 4.7 The Revenue has relied on the decision in the case of M/s Public Health Foundation of India (Supra). In the said case also, it has been held that "grants-in-aid" cannot be considered as consideration for the purpose of service ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that they are liable to discharge the liability of service tax on the gross amount and the appellants in some cases are doing so. In respect of the decision of the Hon'ble Delhi High Court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. (supra), the Hon'ble High Court held that Rule 5(1) of the Service Tax Rules, which provides inclusion of expenditure or cost incurred by the service provider in the course of providing taxable service in the value for the purpose of charging service tax is ultra vires to that extent only, as held in para 18 of the judgment. In the present case, we find that Section 67 of the Finance Act provides that the assessee is liable to pay service tax on the gross amount received in respect of the service provided. In the present case, the service is of supply of manpower. The case before the Hon'ble Delhi High Court was with reference to consulting engineer service and in that regard, the Hon'ble High Court held that the expenditure such as travel cost, hotel stay, transportation are not to be included in the gross amount for the purpose of taxable service. In the present case there are no such expenses. The appellants are receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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