Prima facie case for stay of service tax recovery on ATM-related turnkey installation services accepted pending final hearing.

The Tribunal found that the appellants had shown a prima facie case for waiver of pre-deposit and stay of recovery in respect of service tax and penalty on ATM-related commissioning or installation services. It noted that the demand arose from composite contracts with banks and that the taxability of indivisible turnkey ATM services during the relevant period was in dispute. Relying on authorities cited by the appellants, the Tribunal accepted that services of this nature were arguably not taxable in the manner alleged by the department before 1-5-2006, and granted interim protection pending final hearing.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit and stay of recovery of the service tax and penalty demanded in respect of ATM-related commissioning or installation services.

Analysis: The Tribunal noted that the demand arose from contracts with banks for ATM-related work, and that the dispute concerned taxability of the composite service during the relevant period. It found that the appellants had cited several authorities supporting the contention that, prior to 1-5-2006, indivisible turnkey services relating to ATMs were not taxable in the manner alleged by the department. The Tribunal considered those authorities sufficient to show a prima facie case, and therefore it was appropriate to grant interim protection pending final hearing.

Conclusion: Waiver of pre-deposit and stay of recovery were granted in favour of the appellants.

Final Conclusion: The matter was kept pending for final hearing while interim relief was allowed against recovery of the disputed tax and penalty.

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