Service tax on Grant in aid from Govt.of India

[Nataraj Nagarajan]

Dear Members

Greetings for the day

We are a commercial Food testing laboratory based at Bangalore.We have received Grant-in-aid from ministry of food processing industries for purchase of Instruments/equipments. We would like to whether we need to pay service tax for receiving such grants from the ministry.

We are little concerned on this.

We would like to have your guidance on the same.

Thanks

Nataraj.N

[KASTURI SETHI]

Grant-in-Aid received from Govt. is not consideration. Such grant-in-Aid has not been received in lieu of service. Rest depends upon the terms and conditions of an agreement or contract executed with Govt. Also this case law:-

2015 (38) S.T.R. 421 (Tri. - Mumbai)  = 2015 (1) TMI 388 - CESTAT MUMBAIMINERAL EXPLORATION CORPORATION LTD. Versus COMMR. OF C. EX., NAGPUR

[Nataraj Nagarajan]

Dear Sir

Thanks for your timely inputs and advice

AI Summary

Grant-in-aid not taxable as service; taxability depends on the grant agreement and whether payment is consideration.
A government grant-in-aid for purchase of equipment is not treated as consideration and is not taxable as a service unless the grant agreement or contract shows the payment was made in lieu of or for specific services; factual terms of the grant determine any service tax liability, with tribunal authority cited on similar facts.