2026-VIL-1681-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Taxability of amount received from Metro Rail Corporation by trade association - Appellant, a trade association, received an amount from the Metro Rail Corporation under a sanction order, which the Department treated as consideration for taxable service under Section 65B(44) of Finance Act, 1994, while the Appellant contended that it was compensation on behalf of shopkeepers for loss caused by metro construction and that there was no quid pro quo - Whether the amount received under the sanction order is consideration for a service liable to service tax or compensation for loss - HELD - The sanction order conveyed release of financial assistance for organising lighting and decoration along with display of Metro banners and live model of Metro Rail during the festival, and required separate accounting and a utilisation certificate with the balance to be returned, which establishes the nexus between the money and the activity required by the Corporation and negates the plea of absence of quid pro quo - The sanction order was not compensation to overcome loss, as the Corporation expected publicity and advertisement of the Metro at an occasion of major footfall - The activity of providing facility of advertisement and publicity is covered by the definition of service under Section 65B(44), is not in the negative list under Section 66D, and no exemption was shown - The Appellant's balance sheet recorded the amount, as and when spent, as advertisement expenses - The amount was received as consideration for service and is liable to service tax – The appeal is partly allowed - Remand by Commissioner (Appeals) for want of specification of taxable service clause - Period post introduction of negative list - Commissioner (Appeals) remanded the matter to the adjudicating authority on the ground that no effort was made in the Order-in-Original to explain under which specific clause of the erstwhile service categories under Section 65 the Appellant's activity fell - Whether the remand was justified where the entire demand period is after introduction of the negative list under Section 66D - HELD - Since the entire demand period is post introduction of the negative list, the concept of specific service clauses under Section 65 has become redundant and only the definition of service under Section 65B(44) is relevant - The Commissioner (Appeals) wrongly remanded the matter to the adjudicating authority - The direction of remand is set aside, the other findings are endorsed, the order under challenge is modified accordingly.
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