Small scale service tax exemption depends on aggregate turnover computation, with partial interim relief granted on pre-deposit

Eligibility for the small scale service tax exemption under Notification No. 6/2005-ST had to be determined by computing the aggregate value of services from one or more premises in the manner required by the notification, including exempted and taxable services where the notification so provided. On that computation, the turnover crossed the exemption threshold, so the exemption claim was not accepted at this stage. Considering the appellant's agricultural character and pleaded financial hardship, partial interim relief was granted by directing a pre-deposit of Rs. 1 lakh and waiver of the balance on compliance.

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Issues: Whether, for availing the small scale exemption under Notification No. 6/2005-ST, the aggregate value of taxable services had to include both exempt and taxable services, and whether the appellant should be directed to make pre-deposit pending appeal.

Analysis: The turnover for eligibility to the exemption was required to be computed by taking the aggregate value of taxable services rendered from one or more premises, and this included services otherwise exempt as well as taxable services. On that computation, the appellant had crossed the exemption threshold. The finding of the lower appellate authority therefore could not be faulted. At the same time, regard was had to the appellant's agricultural character and pleaded financial hardship while considering interim relief.

Conclusion: The exemption contention was not accepted at this stage, but the appellant was granted partial interim relief by directing a pre-deposit of Rs. 1 lakh and waiver of the balance on compliance.

Ratio Decidendi: For eligibility to a small scale service tax exemption, the aggregate value of services must be computed as required by the notification and may include exempted as well as taxable services where so provided.

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