Court grants waiver of predeposit for disallowed cenvat credit distribution.

The appellant's request for waiver of predeposit of tax, interest, and penalty was granted by the court. The disallowed cenvat credit amount was distributed by their principal service distributor during the relevant period. The appellant's advocate cited various decisions supporting the distributor's eligibility to distribute service tax credit. The court found a prima facie case in favor of the appellant, leading to the waiver of predeposit and stay on recovery until the appeal's disposal, providing relief to the appellant.

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Issues:
Waiver of predeposit of tax, disallowance of cenvat credit, eligibility of distributor to distribute service tax credit, relevance of citations, payment of service tax under reverse charge mechanism, demand for service tax on GTA services.

Analysis:
The judgment deals with an application for waiver of predeposit of tax, interest, and penalty. The appellant's cenvat credit amount of Rs. 8,41,927 was disallowed by lower authorities as it was distributed by their principal service distributor. The period in question is March 2007 to April 2007, during which the distributor was eligible to distribute service tax credit. The appellant availed credit of service tax paid and distributed it to all units under an input distributor invoice. Centralized registration was obtained for payment of service tax for all seven units, and the tax was discharged accordingly. The department did not dispute the payment of service tax by the Corporate Office, which had centralized registration and paid tax under reverse charge mechanism, leading to the distribution of credit to the units.

The appellant's advocate relied on various decisions to support their case, emphasizing the eligibility of the distributor to distribute service tax credit. However, the respondent's representative reiterated the findings of the Original Adjudicating Authority (OIA), arguing that the credit availed on GTA services for outward transportation was ineligible during the relevant period as the distributor passed on the credit to the appellant. The respondent contended that the citations provided by the appellant's advocate were not relevant as the appellant-assessees themselves paid service tax under reverse charge mechanism on outward transportation services.

In response, the advocate highlighted that the issue of demanding service tax on GTA services was not raised earlier, indicating that a show cause notice was not issued to the appellant for this demand. After hearing both sides, the judge found that a prima facie case had been made out by the appellant. Consequently, the predeposit of tax, interest, and penalty was waived, and the recovery was stayed until the appeal's disposal. The stay application was allowed, providing relief to the appellant in the matter.

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