2017 (1) TMI 1394 - AT - Service Tax

SSI exemption - N/N. 06/05-ST dated 1.3.2005, as amended - case of appellant is that the Commissioner (Appeals) did not consider their request for threshold exemption available to small scale service providers - Held that - One of the conditions of notification is that aggregate value of taxable services rendered by the provider of taxable service does not exceed to ₹ 10 lakhs in the preceding financial year - As recorded in the impugned order, the value of the taxable service rendered by the appellant for the preceding financial year 2009-2010 exceeded to ₹ 10 lakhs. As such, there is no merit in the claim of the appellant for the exemption under the said notification. The impugned order set aside the demand for longer period on the ground that there was an earlier proceeding against the appellant on the same dispute. In such situation, the penalty imposed u/s 78, which is with reference to fraud, collusion, suppression of facts, etc. is not tenable. Demand of tax upheld - penalty set aside - decided partly in favor of appellant.

Summary

Issues:
Tax liability for the year 2010-2011, Threshold exemption for small scale service providers, Penalty under Section 78.

Analysis:
The appellant, engaged in providing taxable service under Commercial Training or Coaching Service, contested the tax liability for the year 2010-2011. The Commissioner (Appeals) ruled that the demand for the period prior to 2010-2011 was time-barred, confirming a liability of &8377; 83,394/- on a taxable value of &8377; 8,93,040/- for 2010-2011, reducing the penalty under Section 78 accordingly. The appellant's main contention was the failure to consider their request for threshold exemption available to small scale service providers and the penalty imposition despite the demand being deemed untenable for the longer period.

The Tribunal examined the claim for exemption up to a turnover of &8377; 10 lakhs for 2010-2011 under Notification No.06/05-ST. The notification allowed exemption subject to conditions, including the aggregate value of taxable services not exceeding &8377; 10 lakhs in the preceding financial year. However, the impugned order noted that the appellant's taxable service value for the previous financial year 2009-2010 exceeded &8377; 10 lakhs, leading to the dismissal of the exemption claim. Despite upholding the service tax liability for the appellant, the Tribunal set aside the penalty under Section 78 due to an earlier proceeding on the same dispute, rendering the penalty untenable under fraud, collusion, or suppression of facts.

In conclusion, the Tribunal upheld the service tax liability as per the impugned order for 2010-2011 but annulled the penalty imposed under Section 78. The appeal was disposed of accordingly on 03.01.2017.