Pre-deposit waiver in service tax disputes depends on a strong prima facie case, with financial hardship supporting only limited conditional relief.

Waiver of pre-deposit of service tax, interest and penalty was refused in full because the claimed exemption notification, on a prima facie view, applied to transmission and distribution of electricity rather than construction of buildings, and the cited precedents were found inapplicable or distinguishable. As no strong prima facie case for complete waiver was shown, the tribunal still considered financial hardship and granted only conditional relief. The appellant was directed to make a partial deposit, after which the balance demand was waived and recovery stayed pending disposal of the appeal.

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Issues: Whether waiver of pre-deposit of service tax, interest and penalty was warranted in the light of the appellant's claim of exemption and financial hardship.

Analysis: The requested exemption notification was found, at first blush, to relate to transmission and distribution of electricity and not to construction of buildings. The cited precedent concerning erection of electricity transmission towers was treated as inapplicable to construction activity. The precedent relied on for the university project was also treated as distinguishable on facts. In the absence of a strong prima facie case for complete waiver, financial hardship was still taken into account while fixing the amount to be deposited.

Conclusion: Complete waiver of pre-deposit was declined. The appellant was directed to deposit Rs. 1,50,000 within eight weeks, and on such deposit the balance of tax, interest and penalty was waived and recovery stayed till disposal of the appeal.

Final Conclusion: The waiver application was only partly granted, with conditional relief limited to the balance demand after partial pre-deposit.

Ratio Decidendi: Waiver of pre-deposit depends on a strong prima facie case, and where such case is not made out the tribunal may still grant limited conditional relief by balancing the merits with financial hardship.

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