Insurance Auxiliary Service pre-deposit dispute: tribunal declined total waiver, allowing only partial interim relief pending appeal.

In a service tax dispute over Insurance Auxiliary Service, the tribunal examined whether incentives received from insurance companies for facilitating insurance of vehicles sold by the appellants justified total waiver of pre-deposit. The appellants' arguments on classification of the activity, alleged travel beyond the show cause notice, and reliance on insurance-regulatory definitions and registration requirements were found insufficient to establish a strong prima facie case for complete waiver. As the controversy remained arguable, full waiver was declined and only partial interim relief was granted. The appellants were directed to deposit 25% of the tax demand, with the balance of tax, interest, and penalty stayed pending disposal of the appeal.

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Issues: Whether the appellants made out a prima facie case for total waiver of pre-deposit in a service tax dispute concerning Insurance Auxiliary Service, and whether partial pre-deposit should be directed.

Analysis: The demand arose from incentives received from insurance companies for facilitating insurance of vehicles sold by the appellants. The classification of the activity as taxable service under Insurance Auxiliary Service, and the contention that the proceedings travelled beyond the show cause notice, were found not to establish a prima facie case for complete waiver. The reliance placed on the definition of intermediary or insurance intermediary under the insurance regulatory law, including the registration requirement, was also found prima facie insufficient to justify total waiver. Since the controversy remained arguable, full waiver was declined.

Conclusion: Partial waiver of pre-deposit was granted. The appellants were directed to deposit 25% of the tax demand, and on such deposit the balance tax, interest, and penalty would remain stayed pending disposal of the appeal.

Final Conclusion: The appellants obtained only conditional interim relief, while the substantive appeal on service tax liability remained pending.

Ratio Decidendi: Total waiver of pre-deposit is not warranted where the appellant fails to establish a strong prima facie case on the taxable character of the service and the dispute remains contentious.

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