2006 (12) TMI 461 - AT - Service Tax

Summary

Issues: Failure to pay service tax, demand of interest and penalty, applicability of section 71A of the Finance Act, 1994, compliance with Supreme Court judgment.

The judgment revolves around the failure of the appellants to pay service tax for the period between November 16, 1997, and June 1, 1998, despite receiving goods transport operators' service. The appellants did not file any return during this period but submitted it on August 27, 2003, within the prescribed time limit under section 71A of the Finance Act, 1994. The original authority confirmed the tax demand but did not levy interest or penalty. However, the Jurisdictional Commissioner imposed a penalty and demanded interest on the tax amount, leading to the present appeal against the Commissioner's order.

The key argument in the appeal was against the demand of interest and penalty, as the appellants were not contesting the tax liability. The learned consultant representing the appellants contended that, based on the facts of the case, the imposition of interest and penalty was unjustified. The records indicated that the return was filed within the period specified by section 71A of the Finance Act, 1994. The judgment referred to a Supreme Court case, Gujarat Ambuja Cements Ltd. v. Union of India, where it was established that assessees who had not paid service tax within the prescribed time limit were granted an extended period to settle their tax dues without incurring interest or penalty. Since the appellants in the present case filed the return and paid the tax within the statutory timeframe, they were entitled to the benefit outlined in the Supreme Court judgment.

Ultimately, the appeal was successful, and the impugned order by the Jurisdictional Commissioner was set aside. The judgment allowed the appeal, emphasizing the appellants' compliance with the statutory requirements and the benefit granted by the Supreme Court ruling for timely tax payment without additional charges.