Service tax on elevator parts under maintenance contracts raised an arguable goods deduction issue and supported stay relief.

Service tax demanded on the cost of elevator components and parts supplied under annual maintenance contracts was found to raise an arguable issue where the invoices and assessment orders showed the materials were sales-tax-paid goods. On a prima facie view, the value of goods supplied could fall for deduction under Notification No. 12/2003-S.T., particularly because the contract indicated that certain replacements were covered by the maintenance arrangement. Waiver of pre-deposit and stay of recovery were therefore granted.

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Issues: Whether waiver of pre-deposit and stay of recovery should be granted in respect of the service tax demanded on the cost of elevator components and parts supplied under annual maintenance contracts.

Analysis: The demand related only to a small amount of service tax on the cost of components and parts replaced under the AMC. The contract indicated that certain replacements were covered by the maintenance arrangement, but the materials supplied were shown to be sales-tax-paid by invoices and assessment orders. The applicability of Notification No. 12/2003-S.T. therefore raised an arguable question, and the material on record showed a prima facie case for considering deduction of the value of the goods supplied.

Conclusion: Waiver of pre-deposit and stay of recovery were granted.

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