Separate billing and conflicting precedent supported prima facie stay relief in tyre re-treading service tax dispute.

Separate billing of material and labour in tyre re-treading services, together with conflicting coordinate Bench views on the scope of Notification No. 12/2003-ST, supported a bona fide dispute on valuation and taxability. On that prima facie basis, interim protection was justified, and waiver of pre-deposit with stay of recovery was granted pending disposal of the appeals.

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Issues: Whether the appellants were entitled to waiver of pre-deposit and stay of recovery in respect of service tax, interest and penalties on tyre re-treading services, in view of separate billing for material and labour and the conflicting tribunal views on the applicability of Notification No. 12/2003-ST.

Analysis: The invoices on record showed separate indication of material cost and labour cost. The Tribunal noted that one coordinate Bench had taken a view that the benefit of Notification No. 12/2003-ST would be available where materials were billed separately and sold along with the services, while another coordinate Bench had taken the opposite view. In the presence of such contrary decisions, the appellants' belief regarding the valuation of the services could not be treated as lacking bona fides, and a prima facie case for interim protection was made out.

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

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