Pre-deposit cannot be imposed before considering a credible exemption claim that may negate tax liability.

An appellate authority should not insist on pre-deposit without first examining whether the taxpayer's activity is prima facie covered by an exemption claim that goes to the root of tax liability. The dispute concerned maintenance of greenery on a road divider and maintenance of the garden and landscape of Raj Bhavan, with the exemption argument based on road-related services and services connected with a Government building. The pre-deposit direction was set aside, and the matter was remitted for decision on merits without insisting on pre-deposit, so that the substantive exemption issue could be determined first.

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Issues: Whether the Commissioner (Appeals) was justified in directing pre-deposit without first considering the applicability of the exemption provisions relating to maintenance of road dividers and maintenance of gardens forming part of Government buildings.

Analysis: The dispute concerned services connected with maintenance of greenery on a road divider and maintenance of the garden and landscape of Raj Bhavan. The exemption claim was founded on the contention that services relating to roads fell within the exemption for road-related services and that the garden, being part of Raj Bhavan, formed part of a Government building. The requirement of pre-deposit could not be mechanically imposed without examining whether the activity was prima facie covered by the exemption provisions, since that went to the root of the appeal.

Conclusion: The direction for pre-deposit was set aside and the matter was remitted to the Commissioner (Appeals) for decision on merits without insisting on pre-deposit.

Final Conclusion: The appellant obtained relief from the pre-deposit condition and the appeal was sent back for fresh adjudication on the substantive exemption issue.

Ratio Decidendi: An appellate authority must first consider a credible exemption claim that goes to the root of tax liability before insisting on pre-deposit, and failure to do so justifies remand for decision on merits.

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