Service tax exemption dispute remanded for fresh adjudication after later clarificatory circular was to be considered

Availability of exemption under Notification No. 32/04-S.T. to the service-tax liable party was not decided on merits; the earlier dismissal was recalled after COD clearance, and the matter was remanded for reconsideration. With both sides accepting that later Clarificatory Circular No. 5/1/07-S.T. dated 12-3-2007 should be examined by the original authority, the impugned order was set aside and fresh adjudication was directed. The original authority was also required to grant an opportunity of hearing, leaving the controversy open for determination in the light of the circular.

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Issues: Whether the dispute concerning availability of exemption under Notification No. 32/04-S.T. to a person liable to pay service tax should be remanded for fresh adjudication in the light of the later clarificatory circular.

Analysis: The matter was not finally decided on the merits of the exemption claim. The earlier dismissal was recalled after COD clearance was obtained, and the parties agreed that the subsequent clarificatory Circular No. 5/1/07-S.T., dated 12-3-2007, should be considered by the original authority. In view of that development and with no objection from the Department, the impugned order was set aside and the matter was sent back for reconsideration.

Conclusion: The issue was remanded to the original authority for fresh decision after considering the clarificatory circular, with an opportunity of hearing to the appellant.

Final Conclusion: The impugned order did not stand and the controversy was left for fresh determination by the original authority.

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