Stay relief on service tax demand denied for a new notification plea, but penalty recovery was protected pending appeal.

A stay application seeking complete waiver of service tax demand and penalty based on Notification No. 6/2005-S.T. failed because the notification plea had not been raised before the original or appellate authority and no factual foundation supported it before the Tribunal. Total waiver of the demand was therefore declined. However, the Tribunal granted interim protection on the penalty and directed deposit of the service tax demand with interest pending disposal of the appeal.

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Issues: Whether the appellant was entitled to waiver of the demand and penalty in a stay application on the basis of Notification No. 6/2005-S.T. and whether the penalty amount could be stayed pending the appeal.

Analysis: The claim under the notification was not specifically raised before the original authority or the appellate authority and no factual foundation had been laid for invoking it for the first time in the Tribunal. On the materials placed, the Tribunal found no basis for total waiver of the demand. At the same time, considering the nature of the dispute, it directed deposit of the service tax demand along with interest and granted protection against recovery of the penalty till disposal of the appeal.

Conclusion: The request for complete waiver of the demand was rejected, while the penalty was stayed and the appellant was directed to deposit the service tax and interest.

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