Extended limitation for port services rejected at interim stage; balance pre-deposit waived and recovery stayed pending appeal.

A CESTAT interim order on port-related services accepted a strong prima facie case of bona fide belief where prior judicial views had treated stevedoring and related services differently from port services. On that basis, the Tribunal held that invocation of the extended period of limitation was not justified at the interim stage for the substantial period covered by the notice. It also noted that a small portion of the demand appeared to be within limitation. Partial pre-deposit was therefore directed, the balance pre-deposit was waived, and recovery of the remaining demand was stayed pending appeal.

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Issues: Whether the demand could be sustained for the entire period by invoking the extended period of limitation and whether waiver of pre-deposit of the balance service tax demand was justified.

Analysis: The appellant's services were being examined in the context of port services and the record indicated prior judicial views taking a different position on whether stevedoring and related services fell within that category. In these circumstances, the Tribunal found a strong prima facie basis for the appellant's plea of bona fide belief and held that, for the substantial period covered by the show cause notice, invocation of the extended period was not justified at the interim stage. At the same time, the Tribunal noted that a small portion of the demand appeared to be within limitation and directed a partial deposit of Rs. 5 lakhs as a condition for pursuing the appeal.

Conclusion: The appellant obtained partial relief: the balance pre-deposit was waived and recovery of the remaining demand was stayed, while a limited deposit was ordered.

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