Debatable service tax liability on a garba mahotsav led to conditional stay of recovery on partial pre-deposit.

A service tax dispute concerning a garba mahotsav activity was considered sufficiently debatable to warrant interim protection because the taxability of the function had not been finally determined and the event was organised by the Government. The Tribunal therefore granted conditional stay of recovery subject to partial compliance by way of pre-deposit. Upon deposit of the specified amount, recovery of the balance service tax remained stayed during pendency of the appeal.

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Issues: Whether the demand of service tax arising from the garba mahotsav activity called for interim protection, and whether pre-deposit should be directed as a condition for stay of recovery.

Analysis: The dispute raised a debatable question as to whether the function was a or otherwise taxable function, and the service tax liability was not finally determined at this stage. Considering the nature of the controversy and the fact that the function was organised by the Government, the Tribunal found it appropriate to grant conditional stay on partial compliance.

Conclusion: The appellant was directed to deposit Rs. 50,000 as pre-deposit, and upon such compliance, recovery of the balance service tax was stayed during pendency of the appeal.

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