2026 (7) TMI 1363

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.... has confirmed the service tax demand as payable on the services of commercial trading and coaching, which had been alleged to be rendered by the appellant. The demand has been confirmed for the period from April 2012 to December 2014 under proviso Section 73 (1) of the Finance Act, 1994 (the Act), along with applicable interest and imposing an equivalent penalty under Section 78 (1) of the Act. 2. The relevant facts are that the appellant is a manufacturer of Motor Vehicle Parts and is also registered under the service tax provisions. On verification of the accounts / trial balance of the appellant, it was found that the appellant had received an amount of Rs.30,46,592/- from the Board of Apprenticeship Training (BOAT) for providing app....

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....y the appellant to the BOAT. It is contended that the amount received from BOAT is a pure reimbursement of the stipend paid to the apprentices under a statutory mandate. Ld. Counsel would submit that such reimbursable expenses cannot be included in the taxable value under Section 67 of the Act, prior to the amendment on 14.05.2015. Ld. counsel further argued that the period of dispute in the present appeal is from April 2012 to December 2014, and prior to the said amendment. It is therefore submitted that the demand confirmed is unsustainable in law. Reliance was placed on the decision in Union of India Vs. M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (3) TMI 357 - SC. The appellant also pleaded that since the matter is ....

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....ustries to engage apprentices and to impart training as a part of their employment, remains uncontroverted. Indisputably, the said activity is seen to have been held by the Adjudicating Authority as that provided consequent to a legal obligation under the Statute. 8. We are of the considered view that essential for a service to be taxed under the Finance Act 1994 is the requirement for a service provider and service recipient relationship founded on a commercial consideration. To our mind, the stipend being paid by the appellant upfront, fifty percent of which when reimbursed by the Government, would be akin to a statutory grant as a welfare mandate under the Apprentices Act. This then does not acquire the character of a service charge a....