Pre-deposit waiver in service tax dispute turned on whether flavoured milk qualified as milk under the exemption notification.

For waiver of balance pre-deposit in a service tax dispute on GTA services used to transport flavoured milk, the exemption under Notification No. 33/2004-ST was examined for whether flavoured milk fell within the expression "milk." The material suggested flavoured milk was a processed product and did not clearly qualify as milk under the notification and relevant chapter note. Because the classification issue required fuller consideration at final hearing, complete waiver was not granted. Partial relief was extended by directing a deposit of Rs. 27,000, after which the balance pre-deposit was waived and recovery stayed during the appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of the balance pre-deposit and stay of recovery in respect of service tax demand on GTA services used for transportation of flavoured milk under Notification No. 33/2004-ST.

Analysis: The exemption covered transport of fruits, vegetables, eggs or milk, and the dispute turned on whether flavoured milk could be treated as milk for the purpose of the notification. The available material indicated that flavoured milk was a processed product and did not clearly fall within the expression "milk" as used in the notification and the relevant chapter note. In view of the competing classifications and the need for fuller consideration at the final hearing, the appellant was held not to have established a prima facie case for complete waiver.

Conclusion: The appellant was directed to deposit Rs. 27,000 within eight weeks, and on such deposit the balance pre-deposit was waived and recovery stayed during the appeal.

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