Factory tool development receipts not taxable as Business Auxiliary Services where no service was involved

Amounts received for developing tools used in the appellant's factory were analysed as consideration linked to manufacture, not as taxable consideration for Business Auxiliary Services. On the stated facts, no service was found to have been involved, so the receipt could not be brought to service tax. The discussion concludes that, because the tools were manufactured in the factory and used in producing goods, the service tax demand was unsustainable and the appellant's appeal succeeded.

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Issues: Whether the amount received for development of tools used within the appellant's factory was liable to service tax as consideration for Business Auxiliary Services.

Analysis: The amount received was found to be for development of tools manufactured in the appellant's factory and used for manufacture of goods. On the facts, no service was held to have been involved, and the receipt could not be treated as taxable consideration for service tax purposes.

Conclusion: The service tax demand was unsustainable and the appeal was allowed in favour of the appellant.

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