Abatement under Service Tax Notification applies only absent Cenvat credit on inputs for the specific service, with disclosed returns defeating extended limitation.

Abatement under Notification No. 1/2006-ST is unavailable only where Cenvat credit is shown to have been taken on the inputs, input services or capital goods used for the very taxable service for which the benefit is claimed; on the stated facts, regular return disclosure supported the claim. The extended period of limitation cannot be invoked merely because the department disagrees with the assessee's treatment where ST-3 returns disclose the abatement claim and the credit position, and there is no material showing suppression or misdeclaration. The note also states that, on these grounds, the demand for service tax, interest and penalties was set aside.

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Issues: (i) Whether the appellant was entitled to abatement under Notification No. 1/2006-ST dated 01.03.2006 in respect of Mandap Keeper Services and Outdoor Catering Services. (ii) Whether the demand was barred by limitation and the extended period could be invoked.

Issue (i): Whether the appellant was entitled to abatement under Notification No. 1/2006-ST dated 01.03.2006 in respect of Mandap Keeper Services and Outdoor Catering Services.

Analysis: The notification denies abatement only where Cenvat credit is taken on the inputs, input services or capital goods used for the very service for which abatement is claimed. The record did not establish any specific availment of Cenvat credit on the inputs or input services used for the impugned mandap keeper and outdoor catering services. The appellant had also filed returns disclosing the abatement claim and the tax position adopted for the services in question. In these circumstances, the denial of abatement could not be sustained.

Conclusion: The appellant was entitled to the abatement, and the demand based on denial of the benefit under Notification No. 1/2006-ST was not sustainable.

Issue (ii): Whether the demand was barred by limitation and the extended period could be invoked.

Analysis: The appellant had been filing ST-3 returns regularly and had disclosed the abatement claim as well as the credit position for other services. The material on record did not show suppression of facts or misdeclaration in the returns so as to justify invocation of the extended period.

Conclusion: The extended period of limitation was not invocable, and the demand was time-barred.

Final Conclusion: The order confirming service tax, interest and penalties was set aside, and the appellant succeeded with consequential relief.

Ratio Decidendi: Abatement under Notification No. 1/2006-ST cannot be denied unless Cenvat credit is shown to have been taken on the inputs, input services or capital goods used for the specific taxable service for which abatement is claimed, and regular disclosure in returns negates invocation of the extended period in the absence of suppression.

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