2011 (5) TMI 88 - AT - Service Tax

Exemption upto Rs. 4 laksh - Waiver of pre-deposit - Since the lower appellate authority has recorded the claim of the appellants regarding small scale exemption but has not considered the same, the impugned order cannot be sustained to that extent - Hence the same is set aside and the matter is remanded to the original authority, with the consent of both sides, for redetermining the tax amount payable after considering the appellant s claim for small scale exemption - The appeal is allowed by way of remand

Summary

Issues involved: Claim of service tax exemption prior to 1.5.2006, small scale exemption eligibility, consideration of small scale exemption by lower appellate authority, waiver of predeposit, remand to original authority for redetermination of tax amount.

Analysis:

1. Claim of service tax exemption prior to 1.5.2006:
The appellants contended that no service tax was payable by the individual appellant before 1.5.2006, as the amendment in the Finance Act, 2006, including any person, was effective only from 1.5.2006. The lower appellate authority did not allow the small scale exemption and did not provide any finding regarding the claim for exemption. The appellants had paid a tax amount of Rs.24,684 for the period of dispute from 1.5.2006 to 30.9.2006, taking into account their eligibility for the small scale exemption of Rs. four lakhs.

2. Consideration of small scale exemption by lower appellate authority:
The lower appellate authority recorded the claim of the appellants regarding the small scale exemption but did not consider it in the final determination of the tax amount payable. As a result, the judgment was set aside, and the matter was remanded to the original authority for redetermining the tax amount after considering the appellant's claim for the small scale exemption. The original authority was directed to provide an adequate opportunity of hearing to the appellants before passing a fresh order.

3. Waiver of predeposit and final disposal of the appeal:
Considering that the appellants had already paid a tax amount of Rs.24,684, the requirement of predeposit of the balance amount was waived. The appeal was taken up for final disposal with the consent of both sides. The impugned order was not sustained due to the failure of the lower appellate authority to consider the small scale exemption claim, leading to the appeal being allowed by way of remand.

4. Future proceedings and appeal listing:
The Department's appeal was directed to be listed on 31.5.2011, with both sides being notified to take notice. The decision to remand the matter to the original authority for redetermination of the tax amount highlighted the importance of considering the appellant's claim for the small scale exemption and providing a fair opportunity for the appellants to present their case.