Taxability of tyre retreading service: full exclusion of material value refused, with only partial pre-deposit relief granted.

Retreading old tyres was treated as taxable under Maintenance and Repair Service, and the disputed question was whether the value of rubber and other materials sold separately could be excluded from the service tax base under Notification No. 12/2003-S.T. Relying on an earlier Tribunal ruling and a Larger Bench decision in a comparable service, the Tribunal found that full exclusion of material value was not established. The request for complete waiver of pre-deposit was therefore rejected, and the applicants were directed to pre-deposit Rs. 6 lakhs, with waiver and stay confined to the balance demand during the appeal.

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Issues: Whether the value of materials used in retreading tyres could be excluded from the assessable value under Notification No. 12/2003-S.T. and whether the applicants had made out a case for total waiver of pre-deposit.

Analysis: The activity of retreading old tyres was treated as taxable under Maintenance and Repair Service. The only dispute was whether the value of rubber and other material sold separately could be excluded from the service tax base under the notification. Relying on an earlier Tribunal decision in a similar retreading matter and on the Larger Bench ruling denying exclusion of material value in a comparable service, the Tribunal held that the claim for full exclusion of material value was not established.

Conclusion: The request for total waiver was rejected and the applicants were directed to pre-deposit Rs. 6 lakhs, with waiver and stay limited to the remaining demand during pendency of the appeal.

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