Service tax valuation of free-of-cost facilities and reimbursed charges led to a split on full waiver of pre-deposit.

A CESTAT Member noted that free-of-cost office space, infrastructure, staff welfare facilities and reimbursed seat-related charges could constitute non-monetary consideration with a direct nexus to the taxable service, making them prima facie includible in service tax valuation and justifying only a partial pre-deposit. The other Member accepted the appellant's case for full waiver, treating the disputed amounts as prima facie excludible from taxable value and holding that the entire pre-deposit should be waived pending appeal. Because the Members differed on the waiver issue, the matter was referred to the President for consideration by a third Member. No final majority view on waiver was reached.

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Issues: Whether the appellant was entitled to full waiver of pre-deposit of service tax, interest and penalty in respect of the demand arising from inclusion of free-of-cost facilities and reimbursed infrastructure charges in the taxable value.

Analysis: One view held that the free supply of office space, infrastructure and staff welfare facilities, as well as reimbursed charges for seats and allied infrastructure, constituted non-monetary consideration having a direct nexus with the taxable service and were prima facie includible in the value of service under the valuation provisions. On that basis, complete waiver was declined and a partial pre-deposit was directed. The other view accepted the appellant's plea for full waiver, treating the appellant as having made out a prima facie case for exclusion of the disputed amounts from the taxable value and for waiver of the entire pre-deposit during the pendency of the appeal. As there was a difference of opinion between the Members, the matter was directed to be placed before the Hon'ble President for reference to a third Member.

Conclusion: No final majority determination was reached on the waiver issue; the dispute was referred for resolution by a third Member.

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