Pre-deposit waiver for service tax demands may be limited where notification-based deductions do not cover fabrication and transport charges.

For pre-deposit purposes, a prima facie reading of Notification No. 12/2003-S.T. limited exclusion from taxable value to the value of goods and materials sold by the service provider, not to additional amounts such as fabrication charges and transport charges claimed as deductions. On that basis, the tribunal found that a complete waiver of pre-deposit was not justified and granted only partial relief. The appellant was directed to deposit a specified sum within four weeks, after which the balance service tax, interest and penalty would remain waived and recovery stayed pending the appeal.

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Issues: Whether the appellant was entitled to complete waiver of pre-deposit and stay of recovery in respect of the service tax demand, interest and equal penalty.

Analysis: The demand was based on the view that, under Notification No. 12/2003-S.T. dated 20-6-2003, only the value of goods and materials sold by the service provider to the recipient of service could be excluded from the taxable value. On a prima facie view, fabrication charges and transport charges had been included in the deduction claimed by the assessee, and therefore a case for total waiver was not made out. Considering the facts and circumstances, partial relief was warranted.

Conclusion: Complete waiver was declined. The appellant was directed to predeposit Rs. 2,00,000 within four weeks, and on such deposit the balance tax, interest and penalty stood waived and recovery stayed pending the appeal.

Ratio Decidendi: For waiver of pre-deposit, the tribunal may grant only partial relief where the applicable notification, on a prima facie view, permits exclusion only of the value of goods and materials sold and not additional charges claimed to be deductible.

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