TaxTMI 
TaxTMI 
2026 (4) TMI 521
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....nd other staples. During the period in dispute, the appellant received reimbursement of expenditure from the Ministry of Food Processing Industries (MOFPI) under the Government Scheme for Creation/Expansion of Food Processing & Preservation Capacities vide two sanction orders No. M19012/14/10-11(RM) dated 12.09.2013 and dated 18.06.2015. The appellant held that such reimbursement of expenses was not liable to service tax, and had neither charged nor paid service tax on the same. During scrutiny of the financial records of the appellant, the Department alleged that the grant-in-aid received by appellant for technological upgradation, establishment, and modernization of food processing industry was with a counter obligation to transfer knowhow and other aspects of IPR to the Govt. Consequently, such grant was a consideration for rendering declared services under Section 66 E (e) of the Finance Act, 1994 and liable to service tax. The Department issued Show Cause Notice No. 25/AC/ST/Audit/Cir-II/AC/32019-20 dated 15.04.2019 for the period 2013-14 & 2015-16 to the appellant proposing service tax demand of Rs. 6,59,000/- along with interest u/s 75 and penalty under Section 78 of the Act....
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....the demand for Rs. 6,59,000/- was liable to be dropped. The Appellant had filed all the ST-3 returns, maintained audited accounts, and had cooperated fully. Hence, there was no suppression or intent to evade wherein interpretational issues were involved. He submitted that the Department had raised the demand based on the appellant's Books of Account. Hence, the entire demand was barred by limitation and was liable to be quashed on this ground alone. He further contended that cum tax benefit should be extended. He prayed that the appeal may be allowed. 4. Learned Authorized Representative for the Department submitted that the plea of the show cause notice beyond 5 years as per Sec 73 of the Finance Act had neither been taken before the Adjudicating authority nor before the Commissioner (Appeals). Thus even if a legal ground, the same could be taken subject to the leave of the Tribunal by filing a miscellaneous application. Learned Authorized Representative contended that by agreeing to the terms of the grant specifically relating to the obligation to expand and upgrade the unit and surrender Intellectual Property (IPR) rights to the Government-the party had performed a "declared ....
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....efore the Grant is released, the grantee should execute a bond with two sureties to the President that (i) he will abide by the conditions of the grant by the target dates, if any, specified therein (ii) that he will not divert the grants and entrust execution of the scheme or work concerned to another Institution(s) or organization(s) and (iii) shall abide by any other conditions specified in this agreement and in the event of his falling to comply with the conditions or committing breach of the bond, the grantee and the sureties individually and jointly will be liable to refund to the President of India, the entire amount of the grant with interest at 10% per annum thereon or the sum specified under the bond. (b) No UC is required to be furnished in instant case as per rule 212(1) of GFR since grant-in-aid are being made as re-imbursement of expenditure already incurred on the basis of duly audited accounts, The Grants-in-aid is non-recurring and confirms to the pattern of assistance framed as per rules of M/o Finance or any scheme framed with the approval of it. Since this grant-in-Aid is re-imbursement to the expenditure alr....
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..... Demand of service tax of 23,44,07,478/- (i) The learned counsel for the appellant has submitted that the details of Skill Development Programme for rural BPL Youths under Swarnjayanti Gram Swarozgar Yojana implemented by Ministry of Rural Development of Government of India is available at Page-107 onwards in appeal paper book. He has submitted that object of the said programme was for development of skill of specified number of youths from below poverty line strata of society where 75% of the amount required for imparting training and improving skills was to be borne by Government of India through grant-in-aid and 25% was to be collected from contribution from non-governmental organizations and trained youth were assisted for getting employment on the basis of imparted skills. The contribution from nongovernmental organization did not have any relationship between the amount contributed and the number of youth recruited into the contributing organization. He has also referred to a letter dated 23/01/2009 issued by Government of India, Ministry of Rural Development available at Page-136 of appeal paper book wherein at Para-5 it is stated that Central Government share of f....
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....n with the number of people to be recruited by such organization and therefore, we do not find any service provider and service receiver relationship between the appellant and the organizations from whom contribution of 2.31 crore (approximate) was received by the appellant. Therefore, we set aside the demand of service tax of 23,44,07,478/- alongwith interest and equal penalty." 8. Similarly, the Tribunal in M/s. Apitco Limited vs. Union of India [2010 (20) STR 475 (Tri.- Bang)] observed as under:- "6. We have given careful consideration to the submissions. It is not in dispute that the assessee company had implemented welfare schemes for the Central and State governments for the benefit of the poor or otherwise vulnerable/weaker sections of the society and collected grants-in-aid from the governments concerned. It is not in dispute that these grants-in-aid had been totally utilized for implementing the welfare schemes. Nothing over and above these grants-in-aid was received by the assessee from any of the governments. In other words, the assessee did not receive any consideration for "any service' to the governments. Therefore, we hold that, in the implementation ....
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....n the above case with the dismissal of the department's Civil Appeal filed against the Tribunal's Order. 7. For the reasons noted above, we hold that any amount of service tax is not leviable/on the grants- -aid received by the assessee from the governments, as project-implementing agency of the governments during the period of dispute. The assessee has also made out a good case on the ground of limitation against a major part of the demand of duty raised in the first show-cause notice. As early as in January 2004, the assessee had furnished all the relevant facts to the department through a letter addressed to the jurisdictional Assistant Commissioner Later on, in 2006, they stated all these facts once again in a letter addressed to the n Superintendent of Service Tax. The show-cause notice in question was issued on 13.06.2006 invoking the first proviso to Section 73(1) of the Finance Act 1994 on the ground of suppression of facts. We have no hesitation to hold that this allegation of suppression of facts by the assessee is not tenable." 8.1 The above decision of this Tribunal has also been upheld by the Supreme Court vide their order dated 2nd May, 2011 [2011 ....