Pre-deposit waiver in service tax dispute depends on prima facie merits, evidence, and financial hardship; partial relief only granted.

Waiver of pre-deposit and stay of recovery were sought in a service tax appeal concerning coaching activities, alleged sale of study material, and mock test charges. The tribunal found no credible evidence supporting separate pre-school coaching, independent sale of books, or disclosure of those activities in ST-3 returns, and the claim of limitation was not substantiated. Financial hardship was also not shown from the balance sheet. On that prima facie record, full waiver was declined and only partial interim relief was granted, subject to a further deposit as ordered.

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Issues: Whether the appellants were entitled to waiver of pre-deposit and stay of recovery pending appeal, including on the grounds of prima facie merits, limitation, cum-duty treatment, and financial hardship.

Analysis: The appeal arose from a service tax demand on coaching activities, alleged sale of study material, and mock test charges. The record showed that the appellants had not produced credible evidence to support the claim of separate pre-school coaching, independent sale of books, or disclosure of these activities in ST-3 returns. The adjudicating findings that no separate receipts were issued and that the test activity was integrally connected with coaching were not rebutted by contrary evidence. On limitation, the claimed disclosure was not substantiated. The balance sheet also did not show serious financial difficulty. In these circumstances, only partial interim relief was justified, while the request for full waiver could not be accepted.

Conclusion: The appellants were directed to deposit a further amount of Rs. 20 lakhs, and only on such deposit was waiver of the balance duty and entire penalty granted with recovery stayed during pendency of the appeal.

Final Conclusion: The matter was not finally decided on merits and was kept pending subject to a condition of further pre-deposit, with interim protection limited to the extent ordered.

Ratio Decidendi: Waiver of pre-deposit depends on a prima facie case, financial hardship, and the evidentiary support for the defence; where these are not established, only partial interim relief may be granted.

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