Trade Notice No. 05/2010-Service Tax/SH.
Dated Shillong, the 2nd September’2010
Subject: Service tax on Commercial training and coaching – clarification whether ‘donation’ is ‘consideration’ – regarding.
Attention of the members of Trade, Industry and all others concerned are hereby invited to the Board’s Circular No. 127/09.2010-ST issued vide F.No. 354/119/2010-TRU dated 16.08.2010 wherein clarification has been issued on 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.
3. Hindi Version follows.
Board’s Circular No.127/09/2010 - ST
Issued vide F.No.354/119/2010-TRU, Dated 16th August 2010
Disclaimer: Though care has been taken to reproduce the text in its original form, in case of any inadvertent mistake, the above mentioned circular may be referred to.
(H. A. Bhat)