Package tour service tax dispute: prima facie arguable taxability and financial hardship justified full pre-deposit waiver and stay.

At the stay stage in a service tax dispute over package tour services, CESTAT, New Delhi granted full waiver of pre-deposit and stayed recovery pending appeal after making only a prima facie assessment. The order noted an arguable issue whether, for the relevant period, airfare, accommodation and food forming part of a package tour could be taxed as tour operator service, and observed that service tax on domestic air travel was introduced later. Financial hardship of the Government-owned appellant was also considered in granting interim relief.

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Issues: Whether the appellant was entitled to waiver of the full pre-deposit and stay of recovery pending appeal in a service tax dispute concerning the taxability of package tour services.

Analysis: The order records only a prima facie assessment at the stay stage. It notes that service tax on domestic air travel was introduced much later and that, on the facts disclosed, there appeared to be an arguable issue whether airfare, accommodation, and food in a package tour could be subjected to tax as part of tour operator service during the relevant period. The financial hardship of the appellant, a Government-owned company, was also taken into account while assessing interim relief.

Conclusion: The appellant was granted waiver of the entire dues arising from the impugned order for hearing of the appeal, and recovery was stayed during pendency of the appeal.

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