2003 (10) TMI 3 - AT - Service Tax

Service Tax Department of Telecom Services (BSNL) Interest on delayed remittance of service tax

Summary

Issues:
- Appeal against Order-in-Appeal upholding interest amount for belated service tax remittance.

Analysis:
1. Issue of Interest Amount: The appeal challenged the Order-in-Appeal upholding the interest amount of Rs. 48,25,578/- imposed on M/s. Chennai Telephones for belated remittance of service tax from August, 1994 to September, 1998. The appellant argued that as a Central Government department, no interest should be levied during that period. Reference was made to a Tribunal decision in G.M. Telecom BSNL v. CCE, Chandigarh, which supported the appellant's position. The appellant contended that since the Department of Telecom Services was corporatised into BSNL after the relevant period, no interest should be charged.

2. Department's Stand: The Revenue, represented by ld. DR Shri C. Mani, reiterated the department's position that there was a delay in remitting the service tax amount to the Central Government. The department highlighted that journal slips were issued from 5-10-1994 to 14-10-1998, indicating the delay in payment. However, the appellant argued that during this period, the Department of Telecommunication was a Central Government department and only later converted into BSNL, hence no interest should be imposed.

3. Tribunal Decision: The Tribunal considered both parties' arguments and referenced the Tribunal decision in G.M. Telecom BSNL v. CCE, Chandigarh. It was noted that during the period in question, the Department of Telecommunication Services was a Central Government Department. Citing the Tribunal's decision, it was concluded that no interest could be charged for delay in crediting service tax to the Government account prior to March, 1999. As the appellants were a Central Government Department at the material time, depositing the service tax daily into the Consolidated Fund of India, the interest amount was set aside, and the appeal was allowed based on the Tribunal's decision.

In conclusion, the Appellate Tribunal CESTAT, Chennai ruled in favor of the appellant, setting aside the interest amount imposed for belated service tax remittance. The decision was based on the understanding that during the relevant period, the appellant operated as a Central Government Department, following a Tribunal precedent that no interest should be charged for delays in crediting service tax to the Government account.