Prima facie case for waiver of pre-deposit secured interim stay in disputed service tax credit utilisation.

The dispute concerned whether the appellant had made out a prima facie case for waiver of pre-deposit and stay of recovery in relation to disputed service tax credit utilisation. The Tribunal considered the 35% restriction on utilisation of service tax credit under the Service Tax Credit Rules, 2002, and the appellant's contention that the restriction applied only where the output service was exempt. It also noted submissions on the absence of suppression and the method of computing credit over the relevant period. On the material before it, the Tribunal found interim relief justified and granted waiver of pre-deposit with stay of recovery pending appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit and stay of recovery in relation to the disputed service tax credit utilisation.

Analysis: The dispute concerned the applicability of the 35% restriction on utilisation of service tax credit under the Service Tax Credit Rules, 2002. The appellant contended that the restriction applied only where the output service was exempt and that the disputed service was not exempt; reliance was also placed on the absence of suppression and on the manner in which the credit should be computed over the relevant period. The Tribunal accepted that, on the material before it, the appellant had shown a case warranting interim relief.

Conclusion: The appellant succeeded on the interim issue and obtained waiver of pre-deposit with stay of recovery pending the appeal.

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