2011 (6) TMI 247 - AT - Service Tax

Modes of payment of Services Tax on GTA services - The assessee initially paid the Service Tax on GTA services through their CENVAT account for the period from January, 2005 to December, 2006 and they also availed credit of the said amount and in the same month - Thereafter the assessee paid the said amount by TR-6 challan dated 30-3-2005 and 28-3-2007 along with interest by TR-6 challan dated 29-1-2008 - the fact is not disputed by either side - the case is remanded to the lower adjudicating authority for limited, purpose to compute the interest, if any.

Summary

Issues:
- Appeal against dropping of interest liability by Commissioner (Appeals) for a specific period.
- Appeal against confirmation of demand of interest subsequent to a certain date.
- Dispute regarding payment of Service Tax on GTA services through CENVAT account.

Analysis:
1. The judgment involves multiple appeals against interest liability and payment of Service Tax on GTA services. The Revenue appealed against the dropping of interest liability by the Commissioner (Appeals) for the period from January 2005 to 18-4-2006, while the assessee appealed against the confirmation of interest demand subsequent to 19-4-2006. A common issue was identified, leading to the consolidation of all three appeals for joint consideration.

2. The case revolved around the assessee's engagement in the manufacture of Organic Chemicals and their utilization of CENVAT credit for inputs, capital goods, and input services during a specified period. The dispute arose when the Service Tax on GTA services, initially paid through CENVAT credit, was later required to be paid in cash. The assessee contended that they promptly paid the required amount in cash after the discrepancy was identified. The lower adjudicating authority rejected the refund claim, prompting the appeals.

3. The assessee argued that despite the procedural lapse of initially paying through credit, they did not retain any money owed to the Government. They cited relevant legal precedents to support their stance, emphasizing that the liability for interest was based on the assumption of money retention, which was not the case. The Revenue, however, contended that the assessee failed to pay the Service Tax as required, citing legal judgments to support their position.

4. The Tribunal carefully considered the submissions and records, acknowledging that the Service Tax on GTA services should be paid in cash, a fact not disputed by either party. The Tribunal noted that interest liability arises when the appellant retains money due to the Government. However, in this case, the assessee promptly paid the amount in cash after the credit payment, indicating no retention of funds.

5. Ultimately, the Tribunal found merit in the assessee's argument and remanded the case to the lower adjudicating authority for reconsideration. The authority was tasked with computing interest, if applicable, for the period during which the assessee retained the money due to the Government. The Tribunal emphasized granting a reasonable opportunity for the assessee to present supporting evidence during the reconsideration process.

6. In conclusion, all appeals were disposed of based on the Tribunal's decision to remand the case for further assessment of interest liability in alignment with the assessee's payment actions and the absence of fund retention.