Service tax valuation dispute on free supplies led to waiver of pre-deposit and stay of recovery pending appeal.

Service tax valuation in works/service contracts was disputed on whether the cost of free supplies made by the service recipient had to be included in the assessable value. Because conflicting views on the issue had already been referred to a Larger Bench and orders were reserved, the appellant was held to have made out a case for interim protection. Waiver of pre-deposit was granted and recovery was stayed pending disposal of the appeal.

---

---

Issues: Whether the appellant was entitled to waiver of pre-deposit in a service tax dispute concerning inclusion of the value of free supplies made by the service recipient in the assessable value.

Analysis: The dispute turned on whether the cost of free material supplied by the service receiver was required to be included in the gross value for discharge of service tax. The issue had already produced contrary views from different Benches and had been referred to a Larger Bench, which was stated to have been constituted and to have reserved orders. In view of the pendency of the issue before the Larger Bench, the appellant was found to have made out a case for interim relief.

Conclusion: Waiver of pre-deposit was granted and recovery was stayed until disposal of the appeal.

---