Service tax on payment card services: strong prima facie case justified complete waiver of pre-deposit pending appeal.

Service tax on credit card, debit card, charge card and other payment card services was disputed on the ground that the taxable service applied only from 1-5-2006, while the Department treated the activity as banking and financial services for an earlier period. For interim relief, CESTAT found the appellant had a strong prima facie case on merits, following its earlier stay order in an identical matter. Complete waiver of pre-deposit of the balance service tax, interest and penalties was granted pending disposal of the appeal, and recovery was stayed during that period.

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Issues: Whether the appellant was entitled to complete waiver of pre-deposit of service tax, interest and penalties pending disposal of the appeal, in view of the prima facie contention that the taxable service was introduced only with effect from 1-5-2006.

Analysis: The appellant claimed that the service in question, namely credit card, debit card, charge card and other payment card service, became taxable only from 1-5-2006, and that no liability arose for the earlier period. The Department sought to treat the activity as banking and financial services for the prior period. The Tribunal followed its earlier stay order in an identical matter and treated the appellant as having a strong prima facie case on merits for the purpose of interim relief.

Outcome: Complete waiver of pre-deposit of the balance amount of service tax, interest and penalties was granted till disposal of the appeal, with no recovery to be made during the stipulated period.

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