Tribunal rules in favor of appellant on small scale exemption issue, overturning service tax demand

The appeal was successful as the Tribunal ruled in favor of the appellant, finding merit in their argument regarding entitlement to the small scale exemption under Notification No. 6/2005-ST. The Tribunal clarified that the aggregate value for exemption calculation does not include amounts paid under reverse charge, focusing solely on amounts charged in consecutive invoices. As a result, the impugned order confirming the demand of service tax, interest, and penalty was set aside, and the appeal was allowed.

---

---

Issues:
1. Confirmation of demand of service tax, interest, and penalty under Sections 76, 77 & 78 of the Finance Act, 1994.
2. Denial of small scale benefit under Notification No. 6/2005-ST.

Analysis:
1. The appeal was filed against an order confirming the demand of service tax, interest, and penalty. The appellant, engaged in paying transport charges, argued that they were registered in service tax and discharged the liability. The dispute arose when the appellant was issued a notice to pay service tax on commission income. The appellant contended that the entire taxable value was below the exemption limit of &8377; 4 Lakhs as per Notification No. 6/2005-ST. The Commissioner denied the small scale benefit citing service tax paid under reverse charge. The appellant argued that the services received should not be considered for exemption calculation under the said notification. The definition of "aggregate value" was crucial in determining the applicability of the exemption.

2. The Tribunal analyzed the definition of "aggregate value" under Notification No. 6/2005-ST, which includes the sum total of taxable services charged in consecutive invoices. The Tribunal clarified that the aggregate value does not encompass amounts paid by the appellant, focusing solely on amounts charged. The consideration paid under reverse charge basis was deemed irrelevant for calculating the aggregate value for exemption. Consequently, the Tribunal found merit in the appellant's submission, ruling that they were entitled to the small scale exemption. The impugned order confirming the demand was set aside, and the appeal was allowed.

---