Pre-deposit relief in service tax dispute: Tribunal reduced the deposit and stayed recovery of the balance pending appeal.

Service tax demand arising from construction activities was challenged on the ground that the abatement benefit under Notification No. 1/2006-ST had not been properly given and that the demand was overstated, with financial hardship also pleaded. The Tribunal considered the submissions and material on record, reduced the required pre-deposit, and protected the appellant from recovery of the balance during the pendency of the appeal, subject to compliance with the deposit condition. Relief was therefore granted in part against the disputed tax, interest and penalty.

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Issues: Whether the appellant was entitled to waiver of pre-deposit of the disputed service tax, interest and penalty, and consequential stay of recovery pending appeal.

Analysis: The dispute related to service tax demand arising from construction activities. The appellant sought waiver on the ground that the demand was overstated, including because the abatement benefit under Notification No. 1/2006-ST had not been properly considered, and also pleaded financial hardship. After considering the rival submissions and the material placed, the Tribunal fixed a reduced pre-deposit amount and granted relief against recovery of the balance during the pendency of the appeal upon compliance.

Conclusion: Waiver was granted in part, subject to deposit of Rs. 65,00,000 within the stipulated time, and recovery of the balance tax, interest and penalty was stayed during the appeal.

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