Pre-deposit waiver in service tax dispute denied where exemption claim, limitation plea, and hardship plea lacked prima facie support.

A stay application concerning service tax disallowance under Notification No. 34/2004-S.T. was tested against the assessee's claim for unconditional waiver of pre-deposit. The exemption plea was found prima facie weak because the clause relied on by the department appeared to cover consignments where the gross amount charged exceeded the prescribed limit, and the limitation defence also failed at the prima facie stage since the exemption availment was not disclosed. Financial hardship was asserted but unsupported by documentary evidence. Unconditional waiver was therefore rejected, and the assessee was directed to make a partial pre-deposit, after which the balance of tax, interest and penalty would remain stayed pending appeal.

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Issues: Whether unconditional waiver of pre-deposit of service tax, interest and penalty was justified, and whether a partial pre-deposit with stay of the balance was warranted.

Analysis: The demand was founded on denial of exemption under Notification No. 34/2004-S.T. on the ground that the gross amount charged for individual consignments transported in a goods carriage exceeded the prescribed limit. The assessee's reliance on the notification was found prima facie untenable in view of the wording of the clause relied on by the department. The plea of limitation was also not accepted prima facie because the availment of exemption was not disclosed. The plea of financial hardship was raised but not supported by documentary material. In these circumstances, the record did not show a strong case for unconditional waiver.

Conclusion: Unconditional waiver was rejected. The assessee was directed to pre-deposit Rs. 3,50,000 within eight weeks, and on such deposit the balance of tax, interest and penalty was waived and recovery stayed pending the appeal.

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