Government of India
Ministry of Finance
Department of Revenue
Tax Research Unit
Circular No.127/09/2010 - ST
North Block, New Delhi
16th August 2010
To
Chief Commissioners of Central Excise and Service Tax (All),
Director General (Service Tax),
Director General (Central Excise Intelligence),
Director General (Audit),
Commissioners of Service Tax (All),
Commissioners of Central Excise and Service Tax (All).
Madam/Sir,
Subject: Service tax on commercial training and coaching – clarification whether
‘donation’ is ‘consideration’ – regarding.
A representation has been received seeking clarification 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’.
- 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.
- Trade Notice/Public Notice may be issued to the field formations accordingly
- Please acknowledge the receipt of this circular. Hindi version follows.
(J. M. Kennedy)
Director, TRU
Tel: 011-23092634
F.No.354/119/2010-TRU