Sales tax abatement mismatch supported a prima facie case for waiver of pre-deposit and stay of recovery.

Pre-deposit of duty and penalty was waived and recovery stayed where the demand related to clearances in 2002-03, while the sales tax abatement scheme relied on covered sales from 1997 to 2000. The mismatch in periods was treated as a serious prima facie infirmity. The scheme was also understood as permitting collection of sales tax at the full rate, with abatement functioning as a subsidy linked to deferred payment. On that basis, the assessee was found to have established a prima facie case against immediate duty recovery at the stay stage.

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Issues: Whether pre-deposit of duty and penalty should be waived and recovery stayed in view of the sales tax abatement scheme and the period to which the demand related.

Analysis: The abatement was availed for sales effected during 1997 to 2000, while the demand was raised in relation to clearances effected in 2002-03. The order treated this mismatch as a serious prima facie infirmity. It was also noted that the State incentive scheme allowed collection of sales tax at the full rate, with the abatement operating as a subsidy linked to deferred payment. On that basis, the assessee was held to have shown a prima facie case for treating the amount as not warranting immediate duty demand at the stage of stay.

Conclusion: Pre-deposit of the duty and penalty was waived and recovery was stayed pending disposal of the appeal.

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