Works contract service tax valuation turns on proof of material sales and incomplete records limit pre-deposit relief.

In a stay petition arising from service tax valuation of works contract services, the Tribunal considered whether the value of materials supplied could be excluded from the assessable value. It accepted a prima facie basis that some contract materials were sold rather than merely consumed, but found the factual record incomplete because the appellant had not produced adequate evidence of the actual value and nature of the goods. On that basis, the Tribunal granted only partial relief, requiring a pre-deposit and waiving the balance demand with recovery stayed during the appeal after compliance.

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Issues: Whether, in the stay petition, the appellant was entitled to waiver of pre-deposit in a service tax dispute concerning valuation of works contract services and exclusion of the value of materials supplied.

Analysis: The appellant claimed that the material portion of the contract value was deductible and that the demand had proceeded on an incorrect premise regarding abatement, while the Revenue contended that no reliable records had been produced to establish the value of goods sold and that the value adopted for VAT could not determine the service tax assessable value. The Tribunal found a prima facie basis to accept that the contracts involved some materials that were sold and not merely consumed, but noted that the appellant had not produced adequate records to establish the actual value and nature of such goods. In view of the incomplete factual foundation, the Tribunal considered it appropriate to grant only partial relief pending appeal.

Conclusion: The appellant was directed to make a pre-deposit of Rs. 7,50,000 within six weeks, and on such deposit the balance demand was waived and recovery stayed during the pendency of the appeal.

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