Project-wise service tax abatement can be tested separately when no evidence shows credit-linked inputs were used in abated projects.

Project-wise abatement under the relevant service tax exemption notifications can be examined separately for each project, rather than by aggregating all of an assessee's projects. Where the demand rests on an assumption that credit-bearing inputs and capital goods must have been used across both abated and non-abated projects, the claim must be supported by evidence, not probability. On the available record, the applicant had disclosed the credit taken and the projects in which the goods were used, and no material showed use of those goods in the projects where abatement was claimed. A prima facie case for waiver of pre-deposit and stay of recovery was therefore made out.

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Issues: Whether the applicant was entitled to waiver of pre-deposit and stay of recovery in a service tax dispute concerning abatement claimed project-wise under the relevant exemption notifications.

Analysis: The demand was founded on the assumption that, because the assessee undertook both abated and non-abated projects, inputs and capital goods on which credit was taken must have been used across all projects. The record, however, showed that the applicant had furnished details of the credit taken and the projects in which the goods were used. In the absence of evidence indicating that credit-bearing inputs or capital goods were used in the projects where abatement was claimed, the demand rested on probability rather than material on record. The notification benefit was treated as capable of being examined with reference to each project separately, rather than by aggregating all projects of the assessee.

Conclusion: The applicant made out a prima facie case for waiver of pre-deposit and stay of recovery. The stay application was allowed.

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