2003 (11) TMI 4 - AT - Service Tax

Service Tax Stay/Dispensation of pre-deposit of service tax Interest on delayed payment of service tax

Summary

Issues:
- Application for dispensing with the condition of pre-deposit of interest on service tax late deposited.
- Liability of the applicant/appellant-company to pay interest on delayed service tax payment.

Analysis:
1. The judgment dealt with an application seeking dispensation from pre-deposit of Rs. 78,391.00 confirmed as interest on service tax late deposited by the applicant/appellant-company. The company received services from Goods Transport Operators during a specific period and was responsible for paying the service tax. However, due to a previous judgment, the company did not deposit the service tax. Subsequently, a provision in the Finance Act, 2000 re-validated the struck-down provisions with retrospective effect, including interest and penalty. The demand for the unpaid tax was raised through a show cause notice. The company deposited the tax before the notice but contested the confirmation of interest by the lower authorities.

2. The Tribunal analyzed the provisions of Section 117 of the Finance Act, 2000, which allowed for the confirmation of interest and penalties. Referring to a previous case, it was established that the liability to pay interest on delayed service tax payment arises after the re-validation of the relevant section. The Tribunal also highlighted Section 75 of the Finance Act, 1994, which mandates interest on delayed tax payment from the liable person as per Section 68 of the Rules. Consequently, the Tribunal concluded that the applicant/appellant-company was indeed liable to pay the interest on the delayed service tax payment.

3. Considering the arguments presented, the Tribunal found no prima facie case to unconditionally allow the Stay Petition filed by the applicant/appellant-company. Therefore, the company was directed to deposit the entire interest amount within four weeks and report compliance by a specified date. The appeal would only be taken up for further consideration after confirming the compliance with the deposit requirement.