67% abatement dispute on free-supply materials led to waiver of remaining pre-deposit and stay of recovery.

A stay application in a service tax dispute on denial of 67% abatement for erection, commissioning or installation service was found to raise a prima facie issue covered by the Larger Bench ruling in Bhayana Builders. The demand had proceeded on the basis that free-supply materials were not included in the gross amount received, but the Tribunal noted that substantial service tax and interest had already been deposited. On that footing, the remaining pre-deposit was waived and recovery stayed during pendency of the appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit and stay of recovery in a dispute concerning denial of 67% abatement under the exemption notifications for erection, commissioning or installation service.

Analysis: The demand had been confirmed on the footing that the appellant claimed benefit under the exemption notifications while not including the value of free supply materials in the gross amount received. The Tribunal noted, at the stay stage, that the issue was prima facie covered by the Larger Bench decision in Bhayana Builders and that the appellant had already deposited substantial amounts towards service tax and interest.

Conclusion: The appellant was held entitled to waiver of the remaining pre-deposit and stay of recovery during pendency of the appeal.

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