Speaking order requirement in service tax exemption disputes: demand dropped without factual findings was remanded for fresh adjudication.

An adjudication order dropping service tax demand was held unsustainable because it did not examine the nature of the services, the contractual terms, or the supporting invoices and documents relied on by the assessee. The authority had merely noted the exemption entries and amounts involved, without recording findings on the factual basis for exemption. As a result, the order was not a speaking order. The demand was set aside to that extent and the matter was remanded for fresh adjudication after proper consideration of the assessee's material and a reasoned decision.

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Issues: Whether the order dropping a substantial part of the service tax demand was unsustainable for want of specific findings and reasons, warranting remand for fresh adjudication.

Analysis: The order under challenge recorded the exemption entries and the amounts involved, but did not deal with the nature of the services, the contractual terms, the supporting invoices, or the documentary material said to have been filed by the assessee. In the absence of findings showing that the relevant documents and facts were examined, the order could not be treated as a speaking order. A decision granting exemption or dropping demand must disclose the basis on which the conclusion is reached, particularly where the department specifically questions the nature of the services and the applicability of the exemption notification.

Conclusion: The order dropping the demand was set aside to that extent and the matter was remanded to the adjudicating authority for fresh decision with proper reasoning and after considering the assessee's material.

Ratio Decidendi: An adjudication order that grants exemption or drops demand without recording findings on the material documents and the factual basis of the claim is not a speaking order and may be remanded for fresh adjudication.

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