Prima facie taxability test governs stay relief, with full waiver on service tax demands and partial deposit on CENVAT credit.

At the stay stage, the Tribunal applied the prima facie test for waiver of pre-deposit and granted full relief on the demands relating to renting of immovable property, real estate agency service, and business auxiliary service, finding that the taxability issues required examination at final hearing and that the transactions appeared, on a preliminary view, to be transfers of rights or sale of shares rather than taxable services. On the CENVAT credit issue, however, the Tribunal held that a complete waiver was not justified because the input services related to construction of immovable property before the renting service came into tax net, and directed deposit of 50% of the denied credit, with the balance stayed pending appeal.

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Issues: (i) whether pre-deposit should be waived in respect of the demand relating to renting of immovable property service; (ii) whether pre-deposit should be waived in respect of the demand relating to real estate agency service; (iii) whether pre-deposit should be waived in respect of the demand relating to business auxiliary service; (iv) whether the denial of CENVAT credit called for total waiver of pre-deposit.

Issue (i): Whether pre-deposit should be waived in respect of the demand relating to renting of immovable property service.

Analysis: The demand arose from the introduction of the taxable service from 1 June 2007. The amount sought to be deposited was claimed to relate substantially to rent for the period prior to that date, though received later, and also to deposits for electricity connection and alleged calculation errors. The merits of these contentions were held fit for examination at final hearing.

Conclusion: Pre-deposit of the amount relating to renting of immovable property service was waived during the pendency of the appeal.

Issue (ii): Whether pre-deposit should be waived in respect of the demand relating to real estate agency service.

Analysis: The transaction was treated as one where the appellant initially intended to purchase property, later backed out because of title dispute, and thereafter received consideration on relinquishment of its rights in favour of another buyer. On a prima facie view, this was regarded as a transfer of rights rather than a taxable service.

Conclusion: Entire pre-deposit for the demand under real estate agency service was waived and recovery stayed during the appeal.

Issue (iii): Whether pre-deposit should be waived in respect of the demand relating to business auxiliary service.

Analysis: The transaction concerned sale of 40% share in a joint venture to a foreign buyer. It was treated prima facie as a sale of shares and not as promotion of the collaborator's brand in India so as to attract business auxiliary service tax.

Conclusion: Entire pre-deposit for the demand under business auxiliary service was waived and recovery stayed during the appeal.

Issue (iv): Whether the denial of CENVAT credit called for total waiver of pre-deposit.

Analysis: The input services had been availed for construction of immovable property before the renting service came into the tax net. The Tribunal was not persuaded to grant full waiver on this count and held that a partial deposit was warranted.

Conclusion: Only 50% of the denied CENVAT credit amount was directed to be deposited, and the balance was stayed during the appeal.

Final Conclusion: Relief was granted substantially in favour of the appellant on three demands, while only partial pre-deposit was ordered on the CENVAT credit issue, leaving the appeal pending for final adjudication.

Ratio Decidendi: At the stay stage, pre-deposit may be waived where the appellant establishes a strong prima facie case on taxability, but partial deposit may still be ordered where such prima facie case is not made out.

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