2024-VIL-1625-CESTAT-AHM-ST
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SERVICE TAX CESTAT Cases

Service Tax - Reimbursements, Grants-in-aid, Pure Agent service – Appellant received certain amounts as corpus fund grants and reimbursements from the Government of Gujarat for organizing training programs. The revenue authorities demanded service tax on these reimbursements by invoking Rule 5 of the Service Tax (Determination and Valuation) Rules, 2006 - Whether the reimbursements received by AMA are in the nature of pure agent expenses and hence excluded from the assessable value for the purpose of service tax – HELD - the reimbursements received by AMA towards expenses like hotel accommodation, dinner charges, local transportation, program folders, and stationery charges are in the nature of pure agent expenses and hence cannot be included in the assessable value for the purpose of service tax - Rule 5 of the Service Tax (Determination and Valuation) Rules, 2006, which provides for inclusion of such reimbursements in the assessable value, is ultra vires to the extent of Section 67 of the Finance Act, 1994 - the impugned order is set and appeal is allowed - Whether the grants-in-aid received by AMA from the Government are subject to service tax – HELD - the grants-in-aid received by AMA from the Government are not subject to service tax as there is no link or nexus between the grant-in-aid and any taxable service provided by AMA to the Government. The grants-in-aid are meant for the charitable cause championed by AMA and not for any specific service, and hence, service tax is not leviable on such grants-in-aid.
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