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Issues: (i) Whether full waiver of pre-deposit and stay of recovery should be granted in respect of the service tax demand and penalties; (ii) what amount should be directed to be deposited as a condition for hearing the appeals.
Issue (i): Whether full waiver of pre-deposit and stay of recovery should be granted in respect of the service tax demand and penalties.
Analysis: The Tribunal found prima facie that the entire demand could not be recovered as it appeared to exceed the tax and penalties proposed in the notice. It also accepted, at a prima facie stage, the plea that there appeared to be duplication in the demand. At the same time, the Tribunal noted that the record did not enable a prima facie finding that the liability was confined to the much lower figure claimed by the applicants.
Conclusion: Full waiver was not granted; the applicants were required to make a partial pre-deposit.
Issue (ii): What amount should be directed to be deposited as a condition for hearing the appeals.
Analysis: On the material before it, the Tribunal considered a limited deposit sufficient to balance the prima facie merits and the absence of a complete break-up of liability under the separate agreements. It therefore fixed a partial pre-deposit and directed waiver of the balance along with stay of recovery on compliance.
Conclusion: A pre-deposit of Rs. 2,00,000 was directed, and upon deposit the balance demand and penalties stood waived and recovery remained stayed.
Final Conclusion: The appeals were permitted to proceed subject to a limited pre-deposit, with the remaining demand and penalties kept in abeyance pending disposal of the appeals.
Ratio Decidendi: In an application for waiver of pre-deposit, the Tribunal may grant partial relief where a prima facie case exists, but may still require a limited deposit when the record does not permit a definitive assessment of the ultimate liability.
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