SSI exemption threshold must be computed on net value after abatement, not gross service value.

For computing the aggregate value for SSI exemption under Notification No. 6/2005-ST, the Tribunal held that the abatement under Notification No. 1/2006-ST must be excluded from the gross amount, so only the net value actually chargeable is counted. Reading the exemption threshold with Sections 65, 66 and 67 of the Finance Act, 1994, it applied the settled principle that the exempted portion is not part of the amount for this limited computation. The Department's objection to the assessee's method was rejected, the demand failed, and the appeals were allowed in favour of the assessee.

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Issues: Whether, for computing the aggregate value for SSI exemption under Notification No. 6/2005-ST dated 01.03.2005, the abatement allowed under Notification No. 1/2006-ST dated 01.03.2006 was required to be excluded, so that only the net value received would be counted.

Analysis: The aggregate value under Notification No. 6/2005-ST was read in the light of its definition and the related service tax framework under Sections 65, 66 and 67 of the Finance Act, 1994. The Tribunal followed the settled view that the computation of the exemption threshold must proceed on the amount actually chargeable after applying the abatement notification, because the exempted portion is not part of the gross amount for this limited purpose. On that basis, the Department's objection to the assessee's method of computation was not accepted.

Conclusion: The abatement under Notification No. 1/2006-ST had to be taken into account while determining the aggregate value for SSI exemption under Notification No. 6/2005-ST, and the demand could not be sustained. The appeals were therefore allowed in favour of the assessee.

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