Pre-deposit waiver granted on prima facie coverage dispute, with remand for merits decision without insistence on deposit.

Pre-deposit of service tax and penalty was waived where the appellant raised a prima facie contention that three-wheelers were not covered within the relevant definition of light motor vehicle for the alleged taxable service. As the appeal had not yet been decided on merits, insisting on pre-deposit at that stage was not warranted. Interim protection was therefore granted and the matter was remanded for decision on merits without insisting on pre-deposit, in accordance with law.

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Issues: Whether, in the circumstances of the case, pre-deposit of service tax and penalty should be waived and the matter remanded for decision on merits without insisting upon pre-deposit.

Analysis: The demand was small in amount and the applicant had raised a prima facie contention that three-wheelers were not covered within the relevant definition of light motor vehicle for the purposes of the alleged taxable service. The appeal before the Commissioner (Appeals) had not been disposed of on merits, and the insistence on pre-deposit was therefore not warranted at that stage. In these circumstances, a case was made out for interim protection and for sending the matter back for a merits decision.

Conclusion: Pre-deposit of service tax and penalty was waived and the matter was remanded to the Commissioner (Appeals) to decide the appeal on merits without insisting on pre-deposit, in accordance with law.

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