Exclusion of material value under service tax notification requires specific documentary proof; partial predeposit relief granted instead.

Notification No. 12/03-ST allows exclusion of the value of goods and materials sold by a service provider only where specific documentary evidence of that value is produced. The appellant relied on invoices and an estimate showing separate service and material values, but the record did not establish that adequate supporting documents were produced before the adjudicating authority to prove the actual value of materials. Complete waiver of predeposit was therefore not justified. Financial hardship was considered only to grant partial relief, and a conditional predeposit was directed with balance recovery stayed pending appeal.

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Issues: Whether the appellant was entitled to waiver of predeposit and stay of recovery in respect of the service tax demand by claiming exclusion of the value of materials sold under Notification No. 12/03-ST dated 01.07.2003.

Analysis: The notification permits exclusion of the value of goods and materials sold by the service provider to the service recipient, provided documentary evidence specifically showing such value is produced. The appellant relied on invoices, an estimate showing separate values for services and materials, and a letter stating that balance sheet and other documents had been placed before audit officers. The record, however, did not show that adequate documentary evidence had been produced before the adjudicating authority to establish the actual value of materials. On that basis, the claim for complete waiver of predeposit was not made out, though the financial position was considered for partial relief.

Conclusion: The appellant was not granted waiver of the entire predeposit. A deposit of Rs. 20,00,000 was directed, and upon such deposit, waiver of the balance demand and stay of recovery were ordered pending appeal.

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