Pre-deposit waiver in tax dispute granted partly after prima facie concerns over duplicated demand, free supply materials, and limitation.

Partial waiver of pre-deposit was granted in a CESTAT interim order after the Tribunal examined prima facie case on recovery of duty demands. It did not accept the contention that the activity was taxable only as works contract for the relevant period, but found prima facie merit in the plea that a substantial sum had already been paid after audit objection, raising possible duplication of demand. It also accepted prima facie that duty liability, including the value of free supply materials, had been discharged in respect of two parties, while finding no sufficient basis for exclusion of such value for the others. Limitation was not found prima facie to assist the appellant.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery, and whether the material placed made out a prima facie case on the demands relating to advance receipts, free supply materials, duplication of demand, and limitation.

Analysis: The Tribunal did not accept the contention that the activity was taxable only as works contract for the relevant period. However, it found prima facie merit in the grievance that the Commissioner had not recorded any finding on the specific plea that about Rs.81 lakhs had already been paid subsequent to audit objection, indicating possible duplication of demand. It also accepted prima facie that, in respect of two parties, the appellant had discharged duty liability including the value of free supply materials, while finding no sufficient basis for exclusion of such value in respect of the other parties. The plea of limitation was not found prima facie acceptable on the material shown.

Conclusion: The Tribunal granted partial relief by directing deposit of Rs.25,00,000 and staying recovery of the balance demand pending disposal of the appeal.

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