Service tax valuation follows the amount actually charged, not a notional higher value based on subsidy or cost structure.

Service tax valuation under section 67 of the Finance Act, 1994 is based on the gross amount actually charged or collected by the service provider, not on a higher notional value derived from the provider's subsidy arrangement or its own cost structure. The amount collected from the recipients constituted the taxable consideration, and subsidy did not enlarge the assessable value. On that basis, the Revenue's enhanced valuation was not sustained, and the assessee was granted full waiver of the pre-deposit/demand in the impugned order.

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Issues: Whether, for valuation of service tax, the taxable value was confined to the gross amount collected by the service provider from the recipients or could be enhanced by reference to the amount paid to the service provider's own supplier, and whether a full waiver of pre-deposit was warranted.

Analysis: Section 67 of the Finance Act, 1994 governs service tax valuation on the basis of the gross amount charged or collected by the service provider. The amount actually collected from the employees was the consideration for the service provided, and the fact that the service was subsidized did not alter the taxable value. The reasoning that tax could be levied on a notional higher value merely because the service had been subsidized was rejected. On this basis, the appellants were found to have a strong prima facie case.

Conclusion: The valuation adopted by the Revenue was not sustained, and full waiver of the dues demanded in the impugned order was granted in favour of the assessee.

Ratio Decidendi: Service tax is to be computed on the gross amount actually charged or collected for the service, and not on any higher notional value arising from subsidy or the service provider's own cost structure.

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