Grant-in-aid under a Centrally Sponsored Scheme is not taxable service consideration, so service tax could not be levied.

Grant-in-aid received under a Centrally Sponsored Scheme was not, by itself, consideration for a taxable service. The Board's circulars clarified that such funds released by the Central Government under the scheme cannot be presumed to represent payment for a service, so the receipt remained in the nature of assistance rather than taxable consideration. On that basis, service tax was held not leviable on the grant received for the scheme.

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Issues: Whether grant received under a Centrally Sponsored Scheme could be treated as consideration for a taxable service and made liable to service tax.

Analysis: The only dispute was whether amounts received as grant-in-aid for a Government of India Centrally Sponsored Scheme could be regarded as consideration for providing a taxable service. The Board's circulars clarified that grant released by the Central Government under such a scheme cannot be presumed to be consideration for a taxable service. On that basis, the receipt of funds in aid of the scheme did not attract service tax.

Conclusion: The levy of service tax was not sustainable on the grant received for the Centrally Sponsored Scheme, and the issue was decided in favour of the assessee.

Ratio Decidendi: Grant-in-aid received under a Centrally Sponsored Scheme is not, by itself, consideration for a taxable service and does not attract service tax.

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