Service tax abatement cannot be denied by splitting a single contract into separate activities when the taxed service is identifiable.

Distinct services covered by one agreement cannot be artificially bifurcated for service tax treatment when the tax is levied on the service actually taxed. In a contract involving outdoor catering, housekeeping, and cleaning in guest house maintenance, the authorities denied the prescribed abatement by splitting the contract value. The tribunal held that such bifurcation was not required by law and, following its settled view, found the impugned order unsustainable. The appellant was entitled to the abatement, and the demand raised by contract bifurcation was set aside.

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Issues: (i) Whether the appellant was entitled to abatement of 50% of the gross amount charged under Outdoor Catering Services notwithstanding that the work order also covered housekeeping and cleaning activities under the guest house maintenance contract.

Analysis: The appellant discharged service tax on the bills raised under the category of outdoor catering services after claiming the prescribed abatement. The lower authorities bifurcated the contract value and denied the abatement on the view that housekeeping and cleaning services formed part of the same contract. The Bench held that the law does not require distinct activities covered by a single agreement to be artificially split and taxed under separate service categories merely because they are contained in one contract. Following the settled view of the Bench in an earlier matter, the impugned order was found unsustainable.

Conclusion: The appellant was entitled to claim the abatement, and the demand sustained by bifurcation of the contract was set aside.

Final Conclusion: The appeal succeeded and the impugned order was quashed.

Ratio Decidendi: Distinct services provided under one agreement cannot be artificially bifurcated for tax treatment when the law permits classification and valuation on the basis of the service actually taxed.

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