2018 (6) TMI 438 - AT - Service Tax

Valuation - abatement - Commercial and Industrial Construction Service - laying of pipes for BSNL - Department was of the view that the total taxable value when considered after giving the threshold limit, the appellant would be liable to pay service tax - N/N. 6/2005-ST dt. 1.3.2005 - Held that - The Department ought to have considered the abatement before determining whether the taxable value falls within the threshold limit or not - demand cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the service provided falls under the Commercial and Industrial Construction Service.
2. Calculation of total taxable value and eligibility for threshold limit.
3. Applicability of abatement as per Notification No.1/2006-ST.
4. Validity of demand for service tax, interest, and penalties.
5. Consideration of abatement before determining taxable value for threshold limit.

Analysis:
1. The appellant was engaged in laying pipes for BSNL, and the department categorized the service under Commercial and Industrial Construction Service. Subsequently, a show cause notice (SCN) was issued proposing service tax, interest, and penalties. The original authority and Commissioner (Appeals) upheld the demand.

2. The appellant contended that the department erred in calculating the total taxable value. The appellant argued that abatement as per Notification No.1/2006-ST should have been allowed before determining the taxable value to ascertain eligibility for the threshold limit. The appellant claimed that after deducting the abatement, they fell within the threshold limit, making the demand unsustainable.

3. The department, represented by Shri K.P. Muralidharan, supported the findings in the impugned order, maintaining the validity of the demand for service tax, interest, and penalties.

4. Upon hearing both sides, the Tribunal examined Notification No.6/2005-ST concerning the threshold limit. The Tribunal noted that the department should have considered the abatement before determining whether the taxable value fell within the threshold limit. Consequently, the Tribunal concluded that the demand could not be sustained and set it aside, allowing the appeal with any consequential relief as per the law.

5. The Tribunal's decision was based on the failure of the department to consider the abatement while determining the taxable value for assessing eligibility against the threshold limit. By setting aside the demand, the Tribunal rectified this error and provided relief to the appellant in accordance with the law.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, relevant legal provisions, and the Tribunal's decision, ensuring a comprehensive understanding of the case.