Predeposit waiver in service tax dispute denied where prima facie case was absent, but partial stay was granted on compliance.

A complete waiver of predeposit was declined because the appellants failed to establish a prima facie case, and the adjudicating authority had already reduced the taxable value by excluding amounts shown as paid. The Tribunal also noted that substantial payments had been discharged through ST-3 returns and challans, so only partial interim relief was justified. The contention that service tax liability should fall on the main contractor rather than the sub-contractor was kept open for final hearing, and recovery of the balance demand, interest, and penalty was stayed on compliance with the directed deposit.

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Issues: Whether waiver of the entire predeposit and stay of recovery should be granted pending appeal in a service tax demand dispute.

Analysis: The Tribunal noticed that the adjudicating authority had already reduced the taxable value by excluding amounts shown as paid, and that the appellants had also discharged substantial sums through ST-3 returns and challans. On that basis, it held that the appellants had not established a prima facie case for complete waiver of predeposit. The contention that tax liability should be fastened on the main contractor, rather than on the appellant as a sub-contractor, was kept open for consideration at the final hearing.

Conclusion: Full waiver of predeposit was declined. The appellants were directed to deposit Rs. 16,00,000, with the balance demand, interest, and penalty remaining waived and recovery stayed upon compliance during pendency of the appeal.

Final Conclusion: Interim relief was granted only to the extent of partial waiver and stay, while the appeal was left to be decided on merits.

Ratio Decidendi: A complete waiver of predeposit is not warranted where the appellant fails to establish a prima facie case and the demand has already been substantially reduced by verification of payments made.

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