Predeposit waiver in service tax dispute upheld for free warranty and extended warranty receipts on prima facie valuation grounds.

Predeposit was waived for service tax demands arising from free warranty service and the extended warranty scheme, and recovery was stayed during pendency of the appeal. For the free warranty issue, the value of spare parts and materials used during warranty service had already been protected in a prior stay order of the same Bench, so waiver was granted at the admission stage. For the extended warranty issue, the booklet indicated prima facie that the warranty service was provided by another company while the applicant only canvassed business for commission; on that basis, the amount received did not at this stage appear to be consideration for a taxable service by the applicant.

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Issues: (i) Whether predeposit should be waived in respect of the service tax demand relating to free warranty service, including the value of materials used. (ii) Whether predeposit should be waived in respect of the service tax demand relating to the extended warranty scheme.

Issue (i): Whether predeposit should be waived in respect of the service tax demand relating to free warranty service, including the value of materials used.

Analysis: The matter on inclusion of the value of spare parts and materials used during free warranty service was already the subject of a prior stay order of the same Bench. Following that approach, the issue was treated as one warranting protection at the stage of admission.

Conclusion: Predeposit was waived on this issue in favour of the assessee.

Issue (ii): Whether predeposit should be waived in respect of the service tax demand relating to the extended warranty scheme.

Analysis: The information booklet for the extended warranty indicated, prima facie, that the warranty service was provided by Maruti Suzuki Ltd., while the applicant was only canvassing business and retaining commission for that activity. On that basis, the amount received towards extended warranty did not, at this stage, appear to be consideration for a taxable service rendered by the applicant.

Conclusion: Predeposit was waived on this issue in favour of the assessee.

Final Conclusion: The appellant was granted complete waiver of predeposit for admission of the appeal, and recovery of the disputed dues was stayed during pendency of the appeal.

Ratio Decidendi: At the stage of stay, where the service appears prima facie to be rendered by another entity and the appellant is only canvassing business for commission, the consideration received is not treated as the taxable value of the appellant's service for purposes of predeposit.

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