Prospective tax exemption amendment under service tax cannot be applied retrospectively to deny an existing exemption.

Service tax demand on management consultancy and manpower recruitment services rendered by a practising chartered accountant for the period before 01.08.2002 was held unsustainable because Notification No. 59/98-ST exempted taxable services provided in professional capacity except those specifically excluded, and the services in question were not among the excluded categories. The Explanation inserted by Notification No. 15/2002-ST was treated as prospective only, since it did not expressly state retrospective effect. The earlier exemption could not be withdrawn retrospectively by the later amendment, and the Board's circular supported availability of the exemption for the relevant period. The impugned demand was therefore set aside and consequential relief followed.

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Issues: Whether the demand of service tax on Management Consultancy Service and Manpower Recruitment Service rendered by a practising chartered accountant for the period prior to 01.08.2002 was sustainable, and whether the Explanation inserted by Notification No. 15/2002-ST had retrospective effect.

Analysis: Notification No. 59/98-ST exempted taxable services provided by a practising chartered accountant in professional capacity except those specifically listed in the notification. The services in question were not among the excluded categories, and the later Explanation inserted by Notification No. 15/2002-ST did not contain any stipulation giving it retrospective effect. The amendment could operate only from the date of its issue, and a benefit available on the plain language of the earlier notification could not be denied retrospectively. The Board's circular also supported the view that the exemption was available for the relevant period.

Conclusion: The demand for the period prior to 01.08.2002 was unsustainable and the exemption applied in favour of the assessee.

Final Conclusion: The impugned demand was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: An explanatory amendment in a tax exemption notification is prospective unless it clearly provides otherwise, and an assessee cannot be denied an exemption that is available on the plain wording of the original notification by giving retrospective effect to the later amendment.

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