Service tax on commercial training and coaching - clarification whether ‘donation' is ‘consideration'
BOARD has received a representation seeking clarification whether donations and grants-in-aid received from different sources by a charitable foundation imparting free livelihood training to the poor and marginalized youth, will be treated as ‘consideration' received for such training and subjected to service tax under ‘commercial training or coaching service'.
Board has examined the issue and clarifies:-
The important point here is regarding the presence or absence of a link between ‘consideration' and taxable service. It is a settled legal position that unless the link or nexus between the amount and the taxable activity can be established, the amount cannot be subjected to service tax. Donation or grant-in-aid is not specifically meant for a person receiving such training or to the specific activity, but is in general meant for the charitable cause championed by the registered Foundation. Between the provider of donation/grant and the trainee there is no relationship other than universal humanitarian interest. In such a situation, service tax is not leviable, since the donation or grant-in-aid is not linked to specific trainee or training.
CBEC Circular No. 127/9/2010 - ST, Dated: August 16, 2010