2026-VIL-805-CESTAT-BLR-ST
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SERVICE TAX CESTAT Cases

Service Tax - Taxability of grants-in-aid received from Government Departments/Ministries under scientific or technical consultancy services - Appellant, a research institute, received grants-in-aid from various Government departments and Ministries - Department alleged that these grants-in-aid are taxable under the category of 'Scientific or Technical Consultancy Services' and raised a demand for service tax - Whether the grants-in-aid received by the appellant from government departments/ministries are taxable under the category of 'Scientific or Technical Consultancy Services' - HELD - The grants-in-aid received by the appellant from Government departments/Ministries are not taxable under the category of 'Scientific or Technical Consultancy Services'. A grant-in-aid is a financial assistance provided by the government to another government body, institution or individual for a specific purpose, without requiring repayment. Such grants are typically used to support specific projects, programs or services and come with specific conditions and reporting requirements. The grants-in-aid received from the government cannot be treated as 'consideration' and therefore are not taxable under the service tax. Further, the demand invoking the extended period of limitation is also unsustainable as the appellant was under a bona fide belief that they are not liable to pay service tax on the grants-in-aid received - The demand and penalty imposed on the appellant is set aside and the appeals are allowed
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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