2026-VIL-1320-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Taxability of amount reimbursed for providing apprenticeship training – Appellant provides apprenticeship training to graduates and diploma holders as statutory obligation under Apprentices Act and pays stipend to apprentices, fifty percent of which is reimbursed by Board of Apprenticeship Training - Department demanded service tax on reimbursed amount treating it as consideration for providing commercial training and coaching services - Whether reimbursed amount constitutes taxable consideration for service rendered under Finance Act 1994 or is merely reimbursement of statutory grant not attracting service tax - HELD - Reimbursed amount does not constitute taxable consideration for service. Essential requirement for service to be taxed under Finance Act is relationship between service provider and recipient founded on commercial consideration. Stipend paid by manufacturer upfront, fifty percent of which reimbursed by Government, is akin to statutory grant as welfare mandate under Apprentices Act and does not acquire character of service charge. Activity does not cross threshold to enter taxable net - When reimbursement of stipend is made without any markup, manufacturer can at best be conduit for transmitting payment from Board to apprentice, acting as pure agent. Even if reimbursement is treated as cost or expenditure incurred while rendering alleged service, it remains only reimbursement. Under Section 67, value of taxable service is gross amount charged by service provider for such service and cannot include expenditure or cost incurred while providing services – The demand confirmed is set aside and the appeal is allowed
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