Abatement under Service Tax notification must be examined before sustaining valuation-based demand for erection and installation services.

Eligibility for the 67% abatement under Notification No. 1/2006-S.T. for erection, commissioning or installation service was central to the valuation dispute, because the demand had been computed on the entire consideration as the assessable value. The notification contemplates gross charges including the value of plant, machinery, equipment, parts and other material sold during provision of the service. As the original adjudicating authority had not examined entitlement to the abatement, the demand could not be sustained without first determining that issue. The matter was therefore remitted to the original adjudicating authority for fresh decision on the notification benefit.

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Issues: Whether the appellant was eligible for the abatement of 67% under Notification No. 1/2006-S.T. in respect of erection, commissioning or installation service and whether the demand could be sustained without examining that eligibility.

Analysis: The demand had been computed on the entire consideration received by treating it as the assessable value. Notification No. 1/2006-S.T. grants abatement for erection, commissioning or installation service and expressly contemplates that the gross amount charged includes the value of plant, machinery, equipment, parts and other material sold during the course of providing the service. The dispute on entitlement to the notification benefit was not examined by the original adjudicating authority. Since the applicability of the abatement was central to the valuation dispute, the matter required fresh consideration on that aspect.

Conclusion: The appellant's eligibility to the abatement notification was not properly examined, and the matter was remitted to the original adjudicating authority for fresh decision on that issue.

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