Revenue-neutrality justified waiver of pre-deposit and stay of service tax recovery for seismic drilling subcontract work.

Revenue-neutrality was accepted as a sufficient basis for interim relief where service tax, interest and penalties were demanded for drilling seismic shot holes in the course of survey and exploration of mineral, oil and gas services. The appellants argued that they acted only as subcontractors and that any tax paid would be creditable to the principal contractor through Cenvat credit. On the material placed, the plea of revenue-neutrality was found unassailable for the stay application, and waiver of pre-deposit with stay of recovery was granted.

---

---

Issues: Whether the demand of service tax for the activity of drilling seismic shot holes was fit for waiver of pre-deposit and stay of recovery in view of the plea of revenue-neutrality.

Analysis: The dispute arose from a demand of service tax, interest and penalties in relation to survey and exploration of mineral, oil and gas services. The appellants contended that they acted only as subcontractors and that any tax payment would be revenue-neutral because the principal contractor would be entitled to Cenvat credit. On the material placed, the plea of revenue-neutrality was found to be unassailable for the purpose of the stay application.

Conclusion: Waiver of pre-deposit and stay of recovery were granted in favour of the appellants.

---