Taxability of centrally sponsored scheme implementation supported waiver of pre-deposit and stay of recovery at the interim stage.

A nodal agency implementing a centrally sponsored micro irrigation scheme relied on a Board circular stating that implementation of such schemes does not amount to taxable service in the manner alleged. On that basis, the appellant was found to have a prima facie case at the stay stage, justifying interim relief. Waiver of pre-deposit was granted and recovery of the confirmed dues was stayed until disposal of the appeal.

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Issues: Whether waiver of pre-deposit and stay of recovery was justified where the appellant, acting as a nodal agency for implementation of a centrally sponsored micro irrigation scheme, relied on the Board circular clarifying taxability of such implementation activity.

Analysis: The appellant was found to be a nodal agency for implementation of a centrally sponsored scheme of the Government of Gujarat. The circular relied upon clarified that implementation of such centrally sponsored schemes does not amount to rendering taxable services in the manner alleged. On that basis, the appellant was held to have established a prima facie case for relief at the stay stage.

Conclusion: Waiver of pre-deposit was granted and recovery of the confirmed dues was stayed till disposal of the appeal.

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