Availability of SSI Exemption

PJ/Case Laws/2010-11/1076

Case: Cancio E. P. Mascarenhas v/s Commissioner of C. Ex. Goa

Citation: 2011(21) S.T.R 17 (Tri. Mumbai)

Issue:- Whether SSI exemption can be claimed by the assessee who has not opted for claiming exemption as per Condition No. 2(1) of Notification No. 6/2005-ST?

Brief Facts:- Appellant received a commission of Rs. 20 lakhs as per the agreement with his client, but did not receive any service tax. Thereafter, the appellant applied for registration to pay service tax on the commission received by him. Registration was granted and appellant paid the service tax. While paying service tax, the appellant did not deduct the basis exemption of Rs. 8 lakhs was not deducted. Hence the appellant filed a refund claim for excess service tax paid on the service tax excess paid on Rs. 8 lakhs under Section 11-B of the Central Excise Act, 1944.

The contention of the appellant was that Notification No. 6/2005-ST, dated 1.3.2005 provides an option to the service provider to avail exemption from tax leviable on the taxable services of aggregate value not exceeding the prescribed limit (Rs. 8 lakhs as per Notification No. 4/2007-ST dated 01.03.2007) in any financial year subject to fulfillment of the condition specified in the said Notification. The refund claim was rejected, holding that the appellant has not exercised to opt for the exemption under the above Notification and hence not entitled for the refund claim.

Aggrieved by the same, appellant are before the Tribunal.

Respondent’s Contentions:- Revenue submitted that the appellant has not opted for the exemption under the said Notification and paid the tax accordingly and as per condition 2(1) of the said notification, the appellant is not entitled for the exemption and hence the refund claim has been rightly rejected. Revenue relied upon L.G. Marwadi v/s CCE, Pune-III [2010 (19) STR 279 (Tri-Mumbai)].

Reasoning of Judgment:- The Tribunal noted that the appellant had received commission on 12.08.2007 and they got registered with a Service Tax department under the category of real estate on 20.11.2007. It is also a fact that the appellant did not recover any service tax from his client. And also paid the service tax on the said commission and not claimed the basic exemption as per Notification No. 6/2005-ST., as amended.

The Tribunal went through the Notification and as per the said Notification, the assessee is to take the decision in advance whether the assessee intends to avail the threshold exemption in advance and the condition laid down in the Notification is that nowhere during the financial year opt for exemption if once they has not opted for exemption in advance. In this case, the appellant has got registered with the department and paid the service tax on whole of the commission received by him. The assessee is new assessee and there is no question of opting for exemption in advance. Appellant has paid the service tax without knowing the fact that the appellant is entitled to claim the threshold exemption as per the above said Notification. Accordingly, condition 2(1) is not applicable to the case of the appellant and the case law relied upon by the Revenue is not relevant to the facts of this case as in the case of L.G. Marvwadi, the appellant had paid service tax for the first half of the year and in second half surrendered the registration certificate and sought the exemption as per the Notification for the earlier period, which are not the facts in this case.

In this case the appellant had done only one transaction of receiving commission and it is also a fact that no service tax has been received by the appellant. Although the appellant has not received the service tax, but being an honest tax payer, opted to pay service tax on the commission received by him and applied for service tax registration and, therefore, paid the service tax. So, there is no question to opt to go out of exemption limit as per the said notification. Hence condition 2(1) of the said notification is not applicable to the facts and circumstances of this case. Accordingly, impugned order is set aside and the refund claim is allowed.

Decision:- Appeal allowed.

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PJ/Case Laws/2010-11/1076

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