Service tax abatement explanation held prima facie prospective, supporting waiver of pre-deposit and stay of recovery.

The Tribunal granted interim protection by waiving pre-deposit and staying recovery because two High Courts had taken a prima facie view that the explanation in the service tax exemption notifications would operate prospectively. On that basis, the value of free supplies made by the client was not to be included in the taxable value for abatement purposes. The appeal was therefore allowed to proceed without immediate deposit, pending final disposal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery during pendency of the appeal on the strength of the prima facie view taken by High Courts on the applicability of the explanation in the service tax exemption notifications.

Analysis: The dispute concerned the effect of the explanation appended to the exemption notifications governing abatement, particularly whether the value of free supplies could be included in the taxable value. Two High Courts had already taken a prima facie view that the explanation would operate prospectively and that the value of goods supplied free by the client should not be included for calculating taxable service. Following that view, the Tribunal considered the appellant entitled to interim protection.

Conclusion: The appellant was granted waiver of pre-deposit and recovery of the adjudged dues was stayed during the pendency of the appeal.

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