Prima facie extended limitation and disputed input-service credit justified only partial waiver of pre-deposit in a service tax stay matter.

A stay application concerning denial of the benefit of Notification No. 1/2006-ST was only partly granted, as the applicant failed to make out a prima facie case for complete waiver of pre-deposit. The plea of limitation was rejected at the interim stage because the assessee had stated in its statutory returns that no input-service credit was taken, while the department learned of the credit issue only during audit, making extended-period invocation prima facie sustainable. As the applicant did not establish non-availment of input-service credit and did not plead financial hardship, full waiver was declined and partial pre-deposit was directed, with the balance dues stayed on compliance.

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Issues: Whether the applicant had made out a prima facie case for complete waiver of pre-deposit, including on the plea of limitation, and consequential stay of the remaining dues.

Analysis: The application sought waiver of service tax, interest and penalties arising from denial of the benefit of Notification No. 1/2006-ST. The plea of time bar was rejected at the prima facie stage because the assessee had declared in its statutory returns that no credit on input services was taken, whereas the department came to know of the availment of credit only during audit; on that basis, invocation of the extended period was held to be prima facie sustainable. As the assessee had not established non-availment of input-service credit and had not pleaded financial hardship, complete waiver was declined.

Conclusion: The applicant was not entitled to full waiver of pre-deposit; it was directed to deposit 50% of the confirmed service tax, and the balance dues were stayed on compliance.

Final Conclusion: The stay application was only partly granted, with conditional protection against recovery limited to the remaining demand after partial pre-deposit.

Ratio Decidendi: In a stay application involving denial of an exemption or abatement notification, a prima facie showing that credit was wrongly availed and that the demand was raised within the extended period from the date of departmental knowledge can justify denial of complete waiver and direction for partial pre-deposit.

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