Input service credit on trading activity denied; pre-deposit directed as no financial hardship was shown.

Pending appeal, the Tribunal considered whether the confirmed duty should be deposited despite the appellants' claim of a prima facie case and financial hardship. The demand stemmed from denial of credit on input services used for trading and for repairing and maintenance activities. Prima facie, the Tribunal noted force in the revenue's contention that trading was not liable to service tax and that input services used for such activity would not qualify for credit. As no financial hardship was shown and the amount involved was small, the appellants were directed to deposit the entire duty amount within six weeks, after which the appeal would be taken up for final disposal.

---

---

Issues: Whether, pending the appeal, the appellants should be directed to deposit the confirmed duty amount in view of the prima facie case and absence of financial hardship.

Analysis: The demand arose from denial of credit on input services used for trading as well as repairing and maintenance activities. The Tribunal recorded prima facie force in the revenue's contention that trading activities were not liable to service tax and that input services used in relation to such activity would not qualify for credit. The amount involved was relatively small and the appellants had not shown that the deposit would cause financial hardship.

Conclusion: The appellants were directed to deposit the entire duty amount within six weeks and report compliance, after which the appeal would be taken up for final disposal.

---