Small-scale service tax exemption depends on verified fee realisation and tax refund facts before denial

Exemption under a small-scale service tax notification could not be denied without verifying whether course fees remained unrealised and whether tax on refunded fees had also been refunded. The record was insufficient to determine if the taxable value stayed within the notification threshold, so factual confirmation was necessary before rejecting the benefit. The order was therefore set aside and the matter remanded for fresh adjudication after verification and hearing.

---

---

Issues: Whether the appellant was entitled to exemption under Notification No. 6/2005-ST dated 01.03.2005 on the basis that part of the coaching fees was not realised and service tax relatable to refunded fees was also refunded, and whether the matter required factual verification before denial of exemption.

Analysis: The entitlement to exemption depended upon whether the unrealised amount of Rs. 89,485/- had actually been recovered towards course fees and whether service tax of Rs. 16,218/- had been refunded in respect of fees returned to candidates. If these factual assertions were correct, the taxable value would remain within the small tax payer threshold and the benefit of the notification could not be denied. The existing record was insufficient for a final determination of these factual aspects, so verification by the adjudicating authority was necessary.

Conclusion: The matter was required to be verified afresh, and the denial of exemption could not be sustained without such verification.

Final Conclusion: The impugned order was set aside and the dispute was remanded to the adjudicating authority for factual verification and fresh decision after giving the appellant an opportunity of hearing.

Ratio Decidendi: Where exemption under a small scale notification turns on disputed facts regarding realisation of consideration and refund of tax, the authority must verify those facts before denying the benefit.

---