Prima facie offshore service performance supported full waiver of pre-deposit and stay of recovery in service tax disputes.

Where testing, inspection, certification and exhibition services were prima facie shown to have been provided and performed entirely outside India, the tribunal treated the service tax demand as not payable at the pre-deposit stage and granted complete waiver of pre-deposit. Relying on the rules governing services provided from outside India and received in India, and on the Board circular concerning exhibition services, it also stayed recovery of service tax, interest and penalty pending the appeals.

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Issues: Whether the applicants made out a prima facie case for total waiver of pre-deposit and stay of recovery in respect of the service tax demands relating to testing, inspection and certification services and exhibition services allegedly availed outside India.

Analysis: The services in question were stated to have been provided and performed outside India. On that basis, and with reference to the taxation rules governing services provided from outside India and received in India, the applicants were found to have a prima facie case that the demands were not payable at this stage. The Board circular regarding exhibition services was also relied upon to support the claim for waiver.

Conclusion: The applicants were entitled to complete waiver of pre-deposit of service tax, interest and penalty, and recovery was stayed during the pendency of the appeals.

Ratio Decidendi: Where the service is prima facie shown to have been provided and performed entirely outside India, full waiver of pre-deposit and stay of recovery may be granted pending appeal.

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