M. Veeraiyan, Technical Member - Heard both sides on the stay petition.

2. The appellant has got a Hotel set up with the help of a contractor. The contractor has paid Service Tax under the category of "Works Contract" after opting for the Composition Scheme. The appellant, as a hotel, is providing services of "Mandap Keeper", "Rent-a-cab Operator", "Health Club and Fitness Centre", "Dry Cleaning", "Internet Cafe", etc. They have taken credit of Rs. 1,29,36,945/- of Service Tax paid under the category of "Works Contract". A show-cause notice was issued alleging that the credit taken was incorrect and proposing to recover the credit so taken and proposing imposition of penalties. The appellant on their own reversed the credit amounting to Rs. 75,13,839/-.

3. The Commissioner after taking note of the reversal of substantial amount as above, ordered recovery of the balance of dues amounting to Rs. 54,23,107/-. However, he demanded interest on the entire amount of Rs. 1,29,36,346/-. In addition, he imposed penalty of Rs. 54,23,107/-.

4.1 The learned advocate for the appellant, referring to the definition of "input service" during the relevant period, submits that the services utilised in relation to "setting up of the premises from which the services rendered" will also qualify for input credit.

4.2 Since the Hotel constructed by them is being used for rendering output services mentioned earlier, they are eligible for the credit taken by them. For example, the entire project management fee paid related to construction of Hotel which included the various sections, buildings and premises required to render services such as 'Mandap Keeper', 'Health Club and Fitness Centre, 'Dry Cleaning', 'Internet Cafe', etc. Similarly, the fee paid towards the 'Architectural Service' related to the premises used for rendering above services.

5. The learned Additional Commissioner (AR) refers to the findings of the Commissioner and submits that the input service on which credit has been taken should be treated as input service only for the purpose of the construction of hotel and not in relation to the impugned output services provided by the appellant.

6. We have carefully considered the submissions made by both sides and perused the records. Against the demand of Rs. 1,29,36,946/- as per the show-cause notice, we find that the appellant has reversed an amount of Rs. 75,13,839/- and the only balance amount stands ordered to be recovered. Further we, prima facie, hold that the appellant may be eligible for credit on some of the services and therefore, the amount already reversed by them should be treated as sufficient for the purpose of hearing the appeal.

7. In view of the above, there shall be waiver of pre-deposit of the balance of dues as per the impugned order and stay of recovery thereof till the disposal of the appeal.