Pre-deposit in service tax appeals: Tribunal required a 50% deposit where canvassing activity was treated as prima facie taxable.

In service tax appeals concerning margin earned from canvassing air cargo, CESTAT Chennai examined whether the appellants were entitled to complete waiver of pre-deposit at admission. The analysis treated the canvassing activity and the taxable transportation element as distinct from the mode of compensation, and noted that the claim was one of exemption for export cargo rather than non-taxability. Distinguishing authorities involving ocean freight and mixed-service situations, the Tribunal found the Revenue's cited decision more applicable. The result was a direction to deposit 50% of the tax demand, with recovery of the balance stayed during the pendency of the appeals.

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Issues: Whether the appellants were entitled to complete waiver of pre-deposit in appeals against service tax demand on the margin earned from canvassing air cargo, and whether a 50% pre-deposit was warranted at the stage of admission.

Analysis: The activity involved canvassing air cargo in India for an airline, while the transportation element was taxable, though exemption was claimed for export cargo. The Tribunal distinguished the case from matters concerning ocean freight and other mixed-service situations, and held that the nature of the activity had to be judged separately from the mode of compensation. On the facts, the decision relied upon by the Revenue was found to be more applicable than the authorities cited for complete waiver.

Conclusion: Complete waiver of pre-deposit was declined and the appellants were directed to deposit 50% of the tax demand for admission of the appeals, with stay on recovery of the balance during pendency.

Final Conclusion: The stay request was only partly accepted, and the appellants obtained conditional interim protection limited to the balance demand after compliance with the directed deposit.

Ratio Decidendi: For interim relief in service tax appeals, the Tribunal may require a substantial pre-deposit where the taxable character of the activity is prima facie distinguishable from cited waiver precedents and the claim is only of exemption rather than non-taxability.

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