Artificial splitting to preserve SSI exemption can justify denial of total pre-deposit and require partial deposit.

Prima facie evidence of artificial splitting of a business to retain SSI exemption can justify denial of complete pre-deposit. The record showed common management, shared power, staff and labour, use of the same brand name, routed sales, and a director's statement suggesting the second unit was created to keep the first unit within the exemption limit and lacked independent financial viability. On that basis, the Tribunal found a strong prima facie case for the Department, declined total waiver of pre-deposit, and directed partial pre-deposit with stay of the balance demand, interest and penalty pending appeal.

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Issues: Whether the appellants were entitled to total waiver of the pre-deposit requirement and stay of recovery pending appeal, and whether the Department had made out a strong prima facie case justifying denial of complete waiver.

Analysis: The units were found to be closely intertwined in management, with both concerns being run by the same person. The materials on record showed common use of power, common staff and labour pool, use of the same brand name, and sales being routed in a manner suggestive of one integrated operation. The statement of the director also indicated that the second unit had been created to keep the sales of the first unit within the exemption limit and that it lacked independent financial viability. On this material, the burden to establish genuine independence was not discharged. In these circumstances, the Tribunal held that the Department had established a strong prima facie case and that complete waiver of pre-deposit was not warranted.

Conclusion: Total waiver of pre-deposit was declined. The appellants were directed to make partial pre-deposit, and on compliance the balance demand, interest and penalty were stayed pending disposal of the appeal.

Ratio Decidendi: Where the record prima facie indicates artificial splitting of a unit to retain SSI exemption and the concerns function as one integrated business, complete waiver of pre-deposit can be refused and partial pre-deposit directed.

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