Pre-deposit waiver in service tax dispute granted on prima facie case, lack of evidence, limitation concerns, and prior tax deposit.

Waiver of pre-deposit was granted where the appellant showed a prima facie case that its activity was providing buses for employee transport, while the Revenue alleged rent-a-cab service without documentary evidence that cabs or taxis were hired out. The Tribunal treated the Revenue's prior awareness of the activity and the gap between such awareness and the show cause notice as raising a serious limitation issue. It also relied on the appellant's prior deposit of the tax attributable to the in-limitation period, together with interest, as sufficient compliance for pre-deposit purposes. The balance service tax and the entire penalty were waived, and recovery was stayed during the appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit of the disputed service tax and penalty pending appeal, having regard to the prima facie merits, the evidentiary burden on the Revenue, and limitation.

Analysis: The appellant was found to be engaged primarily in providing buses for employee transportation, while the Revenue alleged liability under the rent-a-cab category without producing documentary evidence to show that cabs or taxis were in fact hired out. The material on record indicated that the Revenue had been aware of the activity since January 2002, and the show cause notice issued in January 2004 for the period April 2000 to September 2003 raised a serious plea of limitation. The Tribunal also noted that part of the tax attributable to the period within limitation had already been deposited, along with interest, and treated that deposit as sufficient for the purpose of pre-deposit under the applicable provision.

Conclusion: The condition of pre-deposit of the balance service tax and the entire penalty was waived, and recovery of the disputed amounts was stayed during the pendency of the appeal.

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