Predeposit waiver in stay proceedings requires a strong prima facie case; partial relief was granted with conditional deposit.
Sufficient cause was found to recall an ex parte stay order and restore the stay application to its original number. On the request for waiver of predeposit, complete relief was refused because the appellant had not established a strong prima facie case on merits; an earlier decision in the appellant's own case had gone against it, the High Court's order was only temporary, and the disputed period preceded the relied-upon circular. Partial conditional relief was granted instead: the appellant was directed to deposit Rs. 50,00,000 within eight weeks, with the balance waived and recovery stayed during the appeal on compliance.
Issues: (i) Whether the ex parte stay order should be recalled and the stay application restored; (ii) whether the appellant had made out a strong prima facie case for waiver of predeposit of the service tax demand pending appeal.
Issue (i): Whether the ex parte stay order should be recalled and the stay application restored.
Analysis: Sufficient cause was shown for recall of the ex parte stay order. The earlier stay order was passed without hearing on merits, and the application sought restoration of the stay proceedings to their original number.
Conclusion: The ex parte stay order was recalled and the stay application was restored.
Issue (ii): Whether the appellant had made out a strong prima facie case for waiver of predeposit of the service tax demand pending appeal.
Analysis: The earlier order in the appellant's own case had decided the identical issue against the assessee on merits. The Tribunal also noted that the High Court's earlier order granted only a temporary arrangement regarding quantification and recovery, and that the period in dispute preceded the circular relied upon by the appellant. On this basis, the appellant was held not to have established a strong prima facie case for complete waiver of predeposit.
Conclusion: Complete waiver of predeposit was declined. The appellant was directed to deposit Rs. 50,00,000 within eight weeks, and the balance was waived with recovery stayed during the appeal on compliance.
Final Conclusion: The miscellaneous application succeeded, but the stay relief was granted only in part by insisting on a substantial predeposit before full suspension of recovery.
Ratio Decidendi: In stay proceedings, complete waiver of predeposit is not warranted unless the applicant establishes a strong prima facie case on merits; where such case is absent, partial predeposit with conditional waiver of the balance may be directed.
TaxTMI 
AI Drafter ✕
TaxTMI 
