2016 (12) TMI 395 - AT - Service Tax

Small service provider exemption - determination of turnover not exceeding ₹ 10 lakhs - Notification No.6/2005-ST dated 01.03.2005 as amended by Notification 8/2008-ST dated 01.03.2008 - Held that - It can be that explanation which was amended to read the amount as Ten lakhs that the first consecutive payments received during a financial year towards the gross amount needs to be considered for the aggregate value not exceeding ₹ 10 lakhs - In the case in hand we find that at page No.66, income and expenditure account of appellant for the year ended 2010 records receipt of ₹ 10,50,790/- which have to be considered as consecutive payments received out of which an amount of ₹ 78,669/- needs to be deducted as value for the services rendered to SEZ units. This value of ₹ 78,669/- has been rendered to SEZ unit is undisputed. In our view for the year ended 2009-10 appellant has not exceeded the threshold limit of ₹ 10 lakhs as prescribed under Notification No.6/2005-ST as amended by Notification 8/2008-ST. In view of this the demand raised for the year 2009-10 are unsustainable and liable to be set aside. Consequently, the demands raised for the year 2010-11 are also unsustainable as the entire demand has been worked out on the basis that appellant is not eligible for the benefit of Notification No.6/2005-ST as amended as for the proceeding financial year the turnover were more than Rupees Ten lakhs. Appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Demand of service tax under the category of "Consulting Engineer" service based on exceeding the exemption limit of ?10 lakhs for the financial year 2009-10 and subsequent financial year 2010-11.

Analysis:
The appeal addressed the issue of the demand of service tax from the appellant under the category of "Consulting Engineer" service due to exceeding the exemption limit of ?10 lakhs for the financial year 2009-10 and the subsequent financial year 2010-11. The Revenue authorities contended that the appellant had crossed the threshold limit of ?10 lakhs in the financial year 2009-10, making them liable to pay service tax on the amount exceeding the limit. The appellant argued that after deducting the value of services provided to SEZ unit, they remained within the exemption limit for the year 2009-10, as evidenced by their Income & Expenditure Account for the year ended 2010-11. The appellant also cited a similar case before the Bench for reference.

The Departmental Representative (D.R.) countered the appellant's claim by pointing out that the appellant had declared an amount exceeding ?10 lakhs in their ST-3 returns for the year 2009-10, indicating that they had indeed crossed the threshold limit. Upon careful consideration, the Tribunal analyzed the provisions of Notification No. 6/2005-ST and its subsequent amendment by Notification 8/2008-ST. The Tribunal highlighted the requirement to consider the first consecutive payments received during a financial year towards the gross amount for the aggregate value not exceeding ?10 lakhs.

The Tribunal examined the Income & Expenditure Account of the appellant for the year ended 2010 and concluded that the appellant had not exceeded the threshold limit of ?10 lakhs for the year 2009-10 as prescribed under the notifications. Therefore, the demands raised for the financial years 2009-10 and 2010-11 were deemed unsustainable and set aside. The Tribunal held that the impugned order was unsustainable and allowed the appeal with consequential relief, if any.