Prima facie case and substantial compliance justified full waiver of pre-deposit in a service tax stay dispute.

In a stay application concerning service tax on consulting engineering services, the tribunal found a strong prima facie case for the assessee. Amounts linked to sub-consultants were treated as already tax-paid, and receipts attributable to survey, map making and exports were treated as non-taxable for stay purposes. The taxable value was therefore substantially lower than the demand, and the tax and interest already paid were verified as correct by the department. On that basis, full waiver of the balance pre-deposit and recovery was granted pending disposal of the appeal.

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Issues: Whether the appellant had made out a case for waiver of pre-deposit and stay of recovery of the service tax, interest and penalties demanded.

Analysis: The appeal arose from a demand of service tax and penalties for consulting engineering services. On the material placed, the receipt relating to sub-consultants had already suffered service tax, and the amounts attributable to survey, map making and exports were treated as non-taxable for the purpose of the stay consideration. The taxable value was thus found to be substantially lower than the demand, and the amount of tax and interest already discharged was verified by the department as correct. In these circumstances, the appellant was found to have a strong prima facie case on merits.

Conclusion: Full waiver of the balance amount of service tax, interest and penalties was granted and recovery was stayed pending disposal of the appeal.

Ratio Decidendi: Where the appellant shows a strong prima facie case and substantial compliance is demonstrated, pre-deposit and recovery may be fully waived at the stay stage.

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