Pre-deposit in service tax disputes must reflect prima facie sustainability, not mechanically bar appeal hearing.

Insisting on full pre-deposit was excessive where part of a service tax demand was prima facie unsustainable and the balance required reconsideration. The High Court noted that the Tribunal had already accepted the assessee's case on one substantial head and that a coordinate bench had indicated mechanical removal of fly ash may fall outside cleaning service. In that context, dismissal of the appeal solely for non-compliance with the pre-deposit direction was not justified. The dismissal was set aside, and the Tribunal was directed to hear the appeal without insisting on pre-deposit for the cleaning-service demand and related penalty, while the deposit requirement for management, maintenance or repair remained unchanged.

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Issues: Whether the Tribunal was justified in dismissing the appeal for non-compliance of the pre-deposit order when part of the demand was prima facie unsustainable and the balance of the demand required reconsideration.

Analysis: The appeal arose from a service tax demand under multiple heads, including cleaning service, management, maintenance or repair service, construction of complex service, and commercial or industrial construction service. The Tribunal had already accepted the appellant's case on one substantial head and had also been shown a coordinate bench decision indicating that mechanical removal of fly ash may not fall within the scope of cleaning service. In that background, insisting upon deposit of the entire amount linked to the cleaning-service head and the corresponding penalty was considered excessive. The dismissal of the appeal solely for non-compliance of the earlier pre-deposit direction was therefore not justified.

Conclusion: The dismissal order was set aside, and the Tribunal was directed to hear the appeal without insisting on pre-deposit for the cleaning-service demand and the related penalty. The requirement to deposit the amount relating to management, maintenance or repair remained unaffected.

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