Prima facie service tax exemption on materials sold during repairs justified waiver of pre-deposit and stay of recovery.

A prima facie exemption under Notification No. 12/2003-ST was recognised for the value of materials sold during repair activity because the adjudication order had already recorded satisfaction of the notification conditions and that finding was not challenged by Revenue. On that basis, the Tribunal treated the exemption finding as operative for interim purposes and held that the appellant had shown a prima facie case for waiver of pre-deposit and stay of recovery. Reliance on valuation under Rule 5 of the Service Tax (Determination of Value) Rules, 2006 did not defeat interim relief at the admission stage.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and interim stay on the service tax demand on a prima facie showing that the value of materials sold in the course of repair activity was exempt under Notification No. 12/2003-ST.

Analysis: The adjudication order itself recorded that the conditions of Notification No. 12/2003-ST were satisfied, and the Revenue had not challenged that finding. In the circumstances, the Tribunal treated that finding as operative at the interim stage and held that the appellant had made out a prima facie case for exemption in respect of the value of goods sold. The reliance on valuation under Rule 5 of the Service Tax (Determination of Value) Rules, 2006 did not dislodge the prima facie entitlement to relief for purposes of admission of the appeal.

Conclusion: The appellant was granted waiver of pre-deposit and stay of recovery pending disposal of the appeal.

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