Grants and donations not treated as taxable consideration for training services absent nexus with the services rendered.

Grants and donations received by an assessee were examined for inclusion in the taxable value of commercial training or coaching service. In the absence of material showing a nexus between those receipts and the training provided, the demand to treat them as consideration was found prima facie unsustainable. The Board Circular was relied on for the principle that grants-in-aid to charitable foundations do not become taxable consideration merely because training services are also rendered. On that basis, a strong prima facie case was recognised, supporting full waiver of pre-deposit and stay of further proceedings pending the appeal.

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Issues: Whether grants and donations received by the assessee could be included in the taxable value of commercial training or coaching service for the purpose of pre-deposit and interim stay.

Analysis: The demand proceeded on the footing that grants or donations from a pharmaceutical company and Government departments formed part of the consideration for taxable training services. The record, however, did not disclose any material showing a nexus between those receipts and the medical professionals trained by the assessee. In the absence of such nexus, the inclusion of the donations in the gross taxable value was found prima facie unsustainable, particularly in light of the Board Circular clarifying that grants-in-aid to charitable foundations cannot be treated as consideration for commercial training or coaching merely because training services are also rendered.

Conclusion: A strong prima facie case was made out in favour of the assessee, warranting waiver of pre-deposit in full and stay of further proceedings pending disposal of the appeal.

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