Revenue-neutral service tax dispute justified waiver of predeposit and stay of recovery on a prima facie basis.

Denial of Notification No. 34/2004-S.T. led to a service tax demand, but the assessee argued that the corresponding input service tax would be available as CENVAT credit, making the dispute revenue neutral. On that prima facie basis, CESTAT Chennai considered interim protection appropriate and granted waiver of predeposit and stay of recovery. The note states that a prima facie revenue-neutral situation can justify such relief in an appropriate case.

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Issues: Whether waiver of predeposit and stay of recovery should be granted in view of the claimed revenue-neutral situation.

Analysis: The demand of service tax arose from denial of the benefit of Notification No. 34/2004-S.T., and the appellants asserted that the corresponding input service tax would be available as CENVAT credit, making the matter revenue neutral if the demand were sustained. On that basis, the Tribunal found it appropriate to grant interim relief.

Conclusion: Waiver of predeposit and stay of recovery were granted in favour of the appellant.

Ratio Decidendi: A prima facie revenue-neutral situation can justify waiver of predeposit and stay of recovery in an appropriate case.

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