Grant funding not consideration for taxable service; service tax cannot be imposed on state agencies implementing central schemes. The Circular states that central grants released under Centrally Sponsored Schemes to State governments for implementation are not consideration for taxable services; the administrative obligation of States to implement CSS does not make them service providers nor the Central government a service receiver, and levy or collection of service tax on State departments/agencies in such cases is not legally tenable.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Grant funding not consideration for taxable service; service tax cannot be imposed on state agencies implementing central schemes.
The Circular states that central grants released under Centrally Sponsored Schemes to State governments for implementation are not consideration for taxable services; the administrative obligation of States to implement CSS does not make them service providers nor the Central government a service receiver, and levy or collection of service tax on State departments/agencies in such cases is not legally tenable.
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