Board clarification limits extended limitation and supports partial pre-deposit pending appeal in a service tax dispute

A Board clarification was treated as prima facie undermining invocation of the extended period of limitation for demanding service tax where the assessee had acted in line with that clarification. The Tribunal also noted prior orders following the same clarification and found the extended-period objection prima facie in favour of the assessee. On interim relief, it considered the amount already deposited during investigation and directed only a further partial pre-deposit, with the balance demand stayed subject to compliance pending appeal.

---

---

Issues: (i) Whether the extended period of limitation was prima facie invocable in the light of the Board's clarification. (ii) Whether further pre-deposit was required and, if so, to what extent, pending appeal.

Issue (i): Whether the extended period of limitation was prima facie invocable in the light of the Board's clarification.

Analysis: The order records a prima facie view that where the assessee acted in the light of a Board clarification, invocation of the extended period was not for demanding service tax. Reliance was also noted on prior Tribunal orders that had followed the same clarification.

Conclusion: The extended period issue was prima facie found in favour of the assessee.

Issue (ii): Whether further pre-deposit was required and, if so, to what extent, pending appeal.

Analysis: The order noted that the taxability for the period after the later circular required fresh consideration, and took into account the amount already deposited during investigation. On that basis, a further partial pre-deposit was directed, while the balance demand was stayed subject to compliance.

Conclusion: Further pre-deposit of Rs. 69,000 was directed and the balance dues were waived and stayed subject to compliance.

Final Conclusion: The appeal was not finally decided on merits; interim relief was granted only in part, with a limited pre-deposit condition and protection against recovery of the balance during pendency.

Ratio Decidendi: A Board clarification can materially affect the prima facie sustainability of invoking the extended period of limitation, and interim pre-deposit relief may be tailored accordingly pending final adjudication.

---