Service tax valuation for free vehicle service allowed exclusion of parts value on a prima facie basis, with stay granted.

In a prima facie view on service tax valuation, the parts used during free vehicle service were treated as goods sold to the person making payment, alongside the service element received from the vehicle manufacturer. On that basis, the benefit of Notification No. 12/2003-ST was considered available because the value of the parts was viewed as not forming part of the taxable service value at the stage of admission of the appeal. The tribunal therefore held that immediate pre-deposit of the disputed amount was not warranted and stayed recovery during pendency of the appeal.

---

---

Issues: Whether the applicant was entitled to waiver of pre-deposit and stay of recovery during pendency of appeal on the ground that the value of parts used in free service was not includible in the taxable value of service.

Analysis: The activity described as free service was held to involve consideration from the vehicle manufacturer for both service and parts. On a prima facie view, the parts used in the service were treated as goods sold to the person making payment, and the benefit of the exemption under Notification No. 12/2003-ST dated 20.06.2003 was considered available. In that view, the demand raised on the value of the parts did not warrant immediate deposit at the stage of admission of appeal.

Conclusion: The applicant was granted waiver of pre-deposit and recovery of the disputed dues was stayed during the pendency of the appeal.

---