2011 (2) TMI 614 - AT - Service Tax

Demand with interest and penalty - Belated service tax - GTA services - show cause notice was issued under Section 75 of Finance Act 1994 and demand also has been confirmed under the same section - Held that appellant has been able to make out a strong prima-facie case in their favour in view of the fact that for short payment or non payment of service tax the provisions are available in Section 73 of Finance Act 1994 and Section 73 also covers short payment arising under the provisions of Section 75 Finance Act 1994 - Decided in favor of the assessee

Summary

Issues:
Dispute over payment of interest on service tax for goods transport agency services received; Applicability of Section 75 of Finance Act, 1994 for recovery of interest; Time-barred show cause notice under Section 73 of Finance Act, 1994.

Analysis:
The judgment pertains to a case where the appellant, a manufacturer, had paid service tax belatedly for the period from 2004-2005 and 2008-2009 on goods transport agency services received but did not pay the interest at the time of deposit. A show cause notice was issued under Section 75 of the Finance Act, 1994, demanding interest of Rs. 42,657/- and imposing a penalty of Rs. 5000/-.

The learned advocate representing the appellant argued that Section 75 of the Finance Act, 1994, is not a provision for recovery but only for payment. He contended that the impugned orders demanding interest cannot be sustained as Section 75 is not a mechanism for recovery. Additionally, he highlighted that even if the demand could have been made under Section 73 of the Finance Act, 1994, the show cause notice was time-barred as it was issued beyond the one-year period, with no case of suppression or mis-declaration being established.

After considering the arguments from both sides, the judge observed that the appellant had presented a strong prima facie case in their favor. It was noted that for short payment or non-payment of service tax, provisions under Section 73 of the Finance Act, 1994, are available, and Section 73 covers short payments arising under Section 75 of the same Act. Consequently, the requirement of pre-deposit of interest on the service tax demanded and the penalty imposed was waived. A stay against the recovery of the same was granted during the pendency of the appeal.

In conclusion, the judgment addressed the dispute over the payment of interest on service tax for goods transport agency services, the interpretation of Section 75 of the Finance Act, 1994, for recovery of interest, and the timeliness of the show cause notice under Section 73 of the same Act. The decision favored the appellant by granting a stay on the recovery of interest and penalty, acknowledging the strong prima facie case made by the appellant in their defense.