Pre-deposit waiver in service tax dispute was made conditional pending merits review of abatement entitlement.

At the stay stage, waiver of pre-deposit was considered in a dispute arising from denial of abatement under Notification No. 1/2006-ST. The Bench found the record lacked clear contractual material and that the claims on exclusion of steel value and bona fide availment of abatement required detailed examination on merits. It therefore imposed a partial deposit condition as a prerequisite for hearing the appeal and stayed recovery of the remaining demand, interest and penalty subject to compliance.

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Issues: Whether waiver of pre-deposit of the demanded service tax, interest and penalty should be granted and recovery stayed pending disposal of the appeal.

Analysis: The liability arose from denial of the benefit of Notification No. 1/2006-ST and the record did not contain clear contractual material to resolve the controversy at the stay stage. The claim regarding exclusion of steel value and the assessee's plea of bona fide availment of abatement could not be accepted without detailed examination. In the absence of specific details, the Bench found it appropriate to impose a condition for hearing the appeal on merits.

Conclusion: Waiver of pre-deposit was granted only to the extent of the balance amount after directing deposit of Rs. 5 lakhs, and recovery of the remaining demand was stayed subject to compliance.

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