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.?

 

AI Summary

Debate Over Retroactive Tax Exemption: Does New Circular Override Previous Tax Demands or Require Formal Appeal? A service provider initially availed an exemption under a notification, but the Department contested this, demanding service tax, interest, and penalties, which an Adjudicating Officer confirmed in August 2011. In September 2011, the Department issued a circular granting exemption retroactively from October 2000. The discussion centers on whether this circular nullifies the previous adjudication or if an appeal is necessary. Respondents agree that an appeal should be filed, referencing the circular to challenge the demand and argue that the exemption was correctly claimed. The circular is seen as clarificatory, not creating a new exemption.