Exemption notification conditions and prima facie case justified waiver of pre-deposit and stay of recovery in service tax dispute.

The exemption notification was construed as subject only to its express restrictions, including denial where Cenvat credit had been taken or where the benefit of the specified earlier service tax notification had already been availed. As no breach of those conditions was alleged against the appellant, the Revenue's broader restriction was not accepted at the interim stage and a prima facie case was found in favour of the appellant. Waiver of pre-deposit of the tax demand and penalty was therefore granted, and recovery was stayed pending disposal of the appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit in respect of the demand of service tax and penalty under the exemption notification.

Analysis: The exemption notification was read as subject to specific restrictions, namely denial where Cenvat credit had been taken or where the benefit of the specified earlier service tax notification had been availed. No violation of those conditions was alleged against the appellant. On that basis, the claimed restriction urged by the Revenue was not accepted at the interim stage, and the appellant was found to have a prima facie case.

Conclusion: Waiver of pre-deposit of the entire tax demand and penalty was granted and recovery was stayed till disposal of the appeal.

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