Small scale exemption and service tax abatement together supported waiver of pre-deposit and stay of recovery.

For small scale exemption purposes, the Tribunal considered whether the abated value of construction services under the valuation notification should be taken into account when testing eligibility under the exemption notification. It noted that ignoring the statutory abatement would defeat the intended benefit of the exemption scheme, and referred to a prior coordinate decision allowing both notifications to be applied together. On that basis, the appellant was found to have made out a case for unconditional waiver of pre-deposit and stay of recovery pending appeal.

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Issues: Whether unconditional waiver of pre-deposit and stay of recovery should be granted by considering the abated value of taxable services while determining eligibility for small scale exemption.

Analysis: The exemption limit under the small scale exemption notification was to be examined in the light of the abatement available under the separate notification governing valuation of construction services. On the facts, ignoring the abatement would negate the benefit intended by the exemption scheme. The Tribunal also noted that a prior coordinate decision had taken the view that both notifications could be availed together.

Conclusion: The appellant was held to have made out a case for waiver of pre-deposit and stay of recovery during the pendency of the appeal.

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