Prima facie classification of LPG bottling outside Business Auxiliary Service justified full waiver of pre-deposit and stay of recovery.

Service tax on LPG bottling in cylinders was challenged on the footing that the activity did not prima facie fall under Business Auxiliary Service. The Tribunal noted earlier appellate treatment of LPG bottling as Packaging Service and found that the present demand, based on an ancillary-to-sale-and-marketing theory, was not clearly sustainable at the interim stage. On that prima facie assessment, it granted complete waiver of pre-deposit and stayed recovery pending appeal.

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Issues: (i) Whether the appellant made out a prima facie case for complete waiver of pre-deposit and stay of recovery in respect of the service tax demand proposed under Business Auxiliary Service.

Analysis: The dispute concerned service tax on bottling of LPG in cylinders. The Tribunal noted that prior appellate decisions had treated LPG bottling as falling under Packaging Service, while the present demand was raised under Business Auxiliary Service on the footing that the activity was ancillary to sale and marketing. On a prima facie assessment, the Tribunal found that the activity did not appear to fall under Business Auxiliary Service, and therefore the appellant had shown sufficient grounds for grant of full waiver at the interim stage.

Conclusion: The appellant was held entitled to 100% waiver of pre-deposit and stay of recovery pending appeal.

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