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Grants received from Government towards reimbursement of expenses
incurred for survey does not amount to ‘service’, if entire amount is
expended without charging any consideration and “survey report” thus
prepared is retained by assessee and not supplied to Government.
Facts:
The appellant, a 100% Government of India undertaking is engaged
in the activity of making preliminary exploration report, based on
survey and detailed exploration report of mineral deposit for which they
were paid grant-in-aid by the Government of India. The second activity
involved, providing detailed survey and exploration reports on
contractual basis to various clients. The appellant paid service tax on
the second activity. As regards the first activity, the reports were
kept by them and could be sold to private users later, on payment of
fees on which service tax was discharged. Department sought to levy
service tax on grant-in-aids received from the Government under
Scientific and Technical Consultancy Services.
Held:
The Tribunal held
that activities undertaken are primarily classifiable under the Survey
and Exploration of Mineral Service and not as Scientific & Technical
Consultancy services. It was further held that the activity undertaken
by the appellant on the basis of 100% grant received from the Government
and the grant is totally expended on the expenses involved in various
activities as reflected in the balance sheet. For any service, there has
to be a service provider, a service receiver and a consideration. Where
the records show that no consideration has been paid by the Government
to the appellant for undertaking the said work and what has been
received from the Government is only the reimbursement of the actual
expenses involved; the activity is not liable for service tax. The
Tribunal further held that it is also not a matter of dispute that the
reports prepared on the basis of Grant received were kept with them and
may be sold to clients or customers on payment of charges and service
tax is paid on such charges. Therefore, clearly there cannot be
duplication of service tax payment. Accordingly, it was held that no
service has been provided by the appellant to the Ministry of Mines.
