Pre-deposit waiver in service tax dispute limited where exemption claim and Cenvat credit misuse raised prima facie concerns.

Complete waiver of pre-deposit was declined in a service tax appeal where the Tribunal found a prima facie case that exemption under Notification No. 1/2006-ST had been claimed despite availing Cenvat credit, amounting to a misstatement of facts. The contention that tax had been paid by the sub-contractor was not entertained at the waiver stage because it had not been raised before the lower authorities. Interim relief was granted only in part: a conditional pre-deposit was ordered, and the balance demand of tax, interest, and penalty was stayed pending disposal of the appeal.

---

---

Issues: Whether the appellant was entitled to complete waiver of pre-deposit in an appeal against service tax demand raised on the footing that exemption under Notification No. 1/2006-ST was not available because Cenvat credit had been availed, and whether the plea that tax had been paid by the sub-contractor justified waiver.

Analysis: The appellant had sought waiver of pre-deposit on the grounds of eligibility for exemption, payment of tax by the sub-contractor, and limitation. The Tribunal noted that the plea regarding tax payment by the sub-contractor had not been raised before the lower authorities and was therefore not available at the stage of waiver. On the material before it, the Tribunal formed a prima facie view that the appellant had availed the exemption notification while knowing that Cenvat credit was not available, constituting a misstatement of facts.

Conclusion: Complete waiver was declined. The appellant was directed to pre-deposit Rs. 1,00,000 within six weeks, and the balance demand of tax, interest, and penalty was stayed pending disposal of the appeal.

Final Conclusion: Interim relief was granted only in part, with a conditional pre-deposit required for continuation of the stay on the remaining demand.

---