Courier service tax pre-deposit turned on the effective date of the foreign exchange receipt condition.

In a waiver of pre-deposit application concerning courier service tax for the period 16.03.2005 to 15.06.2005, the Tribunal held prima facie that the foreign exchange receipt condition for courier services was introduced only from 16.06.2005 by Notification No. 28/2005-S.T., and that the India-based recipient objection was not prima facie applicable to courier services because that condition arose in a different notification for other services. However, because the disputed period overlapped the effective date of the foreign exchange requirement, the appellant was still required to make a partial pre-deposit. On deposit of Rs. 50,000, recovery of the balance tax, interest and penalty was stayed pending appeal.

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Issues: Whether, in an application for waiver of pre-deposit and stay, the appellant had made out a prima facie case that the demand on courier services was not sustainable because the requirement of receipt of payment in convertible foreign exchange applied only from 16.06.2005, and whether any further pre-deposit was warranted for the disputed period.

Analysis: The disputed period was 16.03.2005 to 15.06.2005. The demand had been confirmed on the ground that payment for the courier service was not received in convertible foreign exchange. Prima facie, that condition was introduced for courier service only with effect from 16.06.2005 by Notification No. 28/2005-S.T. dated 07.06.2005. The objection based on the service recipient being located in India was also found prima facie inapplicable to courier service, since that condition arose in Notification No. 9/2005-S.T. dated 03.03.2005 in relation to other services. At the same time, the requirement regarding receipt of payment in convertible foreign exchange became effective during the disputed period, so some pre-deposit was considered necessary.

Conclusion: The appellant was directed to pre-deposit Rs. 50,000, and on such deposit the balance of tax, interest and penalty was stayed pending appeal.

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