Cenvat credit on outward GTA service: complete pre-deposit waiver refused, but partial relief granted pending appeal.

Prima facie entitlement to complete waiver of pre-deposit was not established in a dispute over utilisation of Cenvat credit to pay service tax on outward GTA service. The interim waiver request was examined against the relevant period and the effect of the omission of the explanation to Rule 2(p) by Notification No. 8/2006-C.E. (N.T.), together with the later amendment and Notification No. 10/2008-C.E. (N.T.). As the later notification had not been placed before the Commissioner (Appeals), complete waiver of tax and penalty was declined. Partial relief was granted on deposit of Rs. 1 lakh, with the balance waived and recovery stayed pending appeal.

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Issues: Whether the applicants made out a prima facie case for total waiver of pre-deposit in the dispute concerning utilisation of Cenvat credit for payment of service tax on outward GTA service.

Analysis: The claim for waiver was considered in the context of the period in dispute and the reliance placed on the omission of the explanation to Rule 2(p) by Notification No. 8/2006-C.E. (N.T.) and the subsequent amendment and Notification No. 10/2008-C.E. (N.T.). Since the latter notification was not placed before the Commissioner (Appeals), the applicants were held not to have established a case for complete waiver of the tax and penalty demand at the interim stage.

Conclusion: Total waiver of pre-deposit was declined. The applicants were directed to deposit Rs. 1 lakh, and on such deposit the balance tax and penalty were waived and recovery stayed pending disposal of the appeal.

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