EFFECT OF EXEMPTION RETROSPECTIVELY

[DR.MARIAPPAN GOVINDARAJAN]

One service provider avails exemption of service under certain Notification.  The Department was of the opinion that the exemption availed by the service provider is wrong and demanded the service tax along with interest and equal penalty.  The same was confirmed by the Adjudicating Officer during August 2011.   Now the Department issued a circular  giving exemption to the service provider with effect from 01.10.2000 during Septmber 2011.   The query is - Whether on the basis of latest circular the order passed by the Adjudicating Authority is-

null and void; or

still having effect despite the circular;

Whether appeal is required to be filed for setting aside the order of Adjudicating Authority relying on the latest circular of the Department.?

 

[YAGAY and SUN]

An appeal to the concerned authority is required to quash the demand of duty. However, a reference of the said circular should be made in the Appeal as well as in the stay application.

[NEERAJ KUMAR, RANCHI]

Yes, an appeal is required to be filed in such cases.

[DEV KUMAR KOTHARI]

As suggested by Shri Pradeep Khatri and Shri Neeraj Kumar, you need to file an appeal and submit that the view about exemption taken by you is coreect and furthermore it is fortified by the new circular. The new circuat can also be considered as explanatory and clarificatory only and  not one creating a new exemption.

Queriest should provide complete details of facts, text of  relevant provision, circuar etc. preferably with link of tmi so that one can apply mind and reply properly without assuming some facts of legal provision.

[DR.MARIAPPAN GOVINDARAJAN]

Thank you for the advices of the learned experts.

AI Summary

Retrospective exemption: departmental circular can affect prior tax demands; file appeal and stay referring to the circular.
A departmentally issued circular granted retrospective exemption for a category of services after an Adjudicating Authority had confirmed a demand of service tax, interest and penalty where the provider had availed the exemption. The question is whether the later circular nullifies the prior adjudication. Practical advice given: the adjudication is not automatically void and an appeal (and stay application if needed) should be filed, expressly relying on the departmental circular and treating it as explanatory or clarificatory of the exemption.