Service tax on nodal agency services for a centrally sponsored scheme was stayed, with waiver of pre-deposit granted.

Services rendered as a nodal agency for implementation of a centrally sponsored micro irrigation scheme were treated as giving rise to a prima facie case that service tax was not attracted. The Board's circular supporting non-taxability of services for implementation of such schemes was relied on at the interim stage, and the appellant was therefore held entitled to waiver of pre-deposit. On that basis, recovery of the service tax demand, interest and penalties was stayed pending further proceedings.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery of service tax demand on the footing that it acted as a nodal agency for implementation of a centrally sponsored micro irrigation scheme.

Analysis: The appellant's role as nodal agency for implementation of the micro irrigation system under a centrally sponsored scheme was undisputed. The Board's circular clarifying that no service tax is attracted where services are rendered for implementation of such centrally sponsored schemes supported the appellant's contention at the prima facie stage. On that basis, the demand, interest and penalties were not required to be secured by pre-deposit at this stage.

Conclusion: The appellant established a prima facie case for waiver of pre-deposit and stay of recovery.

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