Valuation option under service tax rules for a later year requires fresh scrutiny despite prior exercise of the option.

Rule 6(7) of the Service Tax Rules, 1994 permits an air travel agent to opt for the prescribed valuation method at the beginning of a financial year, and the record needed examination on whether that option could still be available for a later period despite earlier exercise of the option. The lower appellate authority had not analysed that question in detail, so the matter was remanded for fresh consideration of the valuation option under rule 6(7) read with section 66 of the Finance Act, 1994. The remand was made subject to partial pre-deposit, with the direction that no further pre-deposit be insisted upon and that principles of natural justice be followed.

---

---

Issues: Whether an air travel agent could be permitted to exercise the valuation option under rule 6(7) of the Service Tax Rules, 1994 for a later financial year despite having exercised the option for an earlier period, and whether the matter required reconsideration by the lower appellate authority.

Analysis: The option under rule 6(7) is exercisable at the beginning of a financial year. The record required examination of whether the assessee could not be denied the option for the subsequent period merely because the option had been exercised for an earlier period. The lower appellate authority had not examined this aspect in detail. The assessee was directed to make a partial pre-deposit, after which the lower appellate authority was to reconsider the applicability of rule 6(7) for the relevant period, read with section 66 of the Finance Act, 1994, without insisting on any further pre-deposit and after following principles of natural justice.

Conclusion: The matter was remanded for fresh consideration on the valuation option issue, subject to partial pre-deposit.

---