Pre-deposit of penalties waived where tax was paid before notice and a strong prima facie case was shown.

Where service tax liability was discharged before the show-cause notice, the dispute on penalties and the extended penal provision was left for final hearing, and a strong prima facie case justified interim relief. On that basis, the pre-deposit of penalties was waived pending appeal.

---

---

Issues: Whether waiver of pre-deposit of penalties was justified pending appeal.

Analysis: The appellants had discharged the service tax liability before issuance of the show-cause notice. The dispute on penalty, including invocation of the extended penal provision, required examination at the final hearing. On a prima facie view, the appellants showed a strong case for interim relief.

Conclusion: The pre-deposit of the penalties was waived in favour of the assessee.

Ratio Decidendi: Where the tax liability has been discharged before notice and the appellant establishes a strong prima facie case, pre-deposit of penalties may be waived pending final adjudication.

---