Pre-deposit waiver for service tax penalty was allowed where tax and interest were paid before notice.

Where service tax and interest were paid before the show-cause notice and the assessee disputed the levy on merits, insistence on pre-deposit of the penalty amount was considered unnecessary. The Tribunal accepted that several grounds had been raised against penalty and found that waiver of pre-deposit was justified. The stay application was accordingly allowed in favour of the appellant.

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Issues: Whether waiver of pre-deposit of the penalty amounts under the service tax provisions was justified and the stay application deserved to be allowed.

Analysis: The appellant had paid the service tax along with interest before the issuance of the show cause notice. The Tribunal also noted that the appellant was contesting the levy on merits and had raised several pleas against the imposition of penalty. In these circumstances, the prayer for insistence on pre-deposit of the penalty amount was found unnecessary.

Conclusion: Waiver of pre-deposit was granted and the stay application was allowed in favour of the appellant.

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