2017 (11) TMI 418 - AT - Service Tax

Value based exemption - N/N. 4/07 dated 1-3-2007 - case of appellant is that during the period 2007-08, 2008-09 and 2009-10 exemption of threshold limit of ₹ 8 Lacs/10 Lacs was not considered by the Commissioner(Appeals) under the N/N. 6/05-ST dated 1-3-2005, 04/07-ST dated 1-3-2007 and 08/2008-ST dated 1-3-2008 - Held that - the Ld. Commissioner denied exemption upto threshold limit of ₹ 10 Lacs during the year 2008-09 on the ground that the appellant have exceeded the limit of ₹ 8 Lacs in the preceding financial year i.e. 2007-08. However, as per the amendment N/N. 8/2008-ST dated 1-3-2008, the value of the preceding financial year i.e in 2007-08 should not exceed ₹ 10 Lacs. This is not under dispute that the appellant have not exceeded ₹ 10 Lacs in 2007-08, hence they are entitle for exemption upto ₹ 10 Lacs in the year 2008-09. The appellant in their chart claimed that cum tax value on total value i.e. ₹ 8,06,224/- in year 2007-08 and ₹ 15,05,984 in 2008-09, which is not correct. For the exempted value i.e. ₹ 8 Lacs and ₹ 10 Lacs respectively cum tax benefit not available being the said amount is not liable for service tax. The adjudicating authority is directed to re-quantify the demand - appeal allowed by way of remand.

Summary

Issues Involved:
Determining correct application of value-based exemption notification No.4/07 dated 1-3-2007 to the appellant.

Analysis:

1. Issue of Threshold Exemption Limit Consideration:
The appellant contested that the Commissioner(Appeals) did not consider the exemption of the threshold limit of ?8 Lacs/10 Lacs during 2007-08, 2008-09, and 2009-10 under various notifications. The appellant claimed that the exemption limit was not allowed correctly. The appellant provided a detailed chart showing the amounts received, service tax, ex-tax amount, and tax liability for each year.

2. Admissibility of Threshold Exemption:
The Tribunal noted that in 2007-08, the threshold value of ?8 Lacs was exceeded by ?6224, and in 2008-09, the value was ?15,05,984, surpassing the limits of ?8 Lacs and ?10 Lacs, respectively. The Commissioner(Appeals) made findings based on the notifications, specifying the monetary conditions for exemption and the aggregate value of taxable services received by the appellant in the preceding financial years.

3. Eligibility for Exemption:
The Commissioner found that the appellant was eligible for exemption in 2007-08 as the gross income in the preceding financial year was below the exemption limit. However, the appellant was not eligible for the small-scale exemption in 2008-09 as they had crossed the limit in the previous year. The Tribunal observed discrepancies in the appellant's claim of cum tax value and directed the adjudicating authority to re-quantify the demand based on the correct application of exemption limits.

4. Conclusion and Disposition:
The Tribunal disposed of the appeal by remanding it to the Adjudicating authority for re-quantification of the demand in alignment with the correct interpretation of the exemption limits. The judgment emphasized the importance of adhering to the specific monetary conditions outlined in the notifications for availing exemptions and clarified the calculation methodology for determining tax liability within the exemption thresholds.

5. Final Pronouncement:
The judgment was pronounced in court on 27-09-2017 by the Tribunal, highlighting the detailed analysis of the issues raised by the appellant regarding the correct extension of value-based exemption notifications and the subsequent findings by the Commissioner(Appeals) regarding the eligibility for exemption based on the aggregate value of taxable services in the preceding financial years.