2011 (9) TMI 444 - AT - Service Tax

Recovery of interest - Time period for issue of Show cause notice - Held - the Show Cause Notice was issued beyond the period of 1 year. There is no indication in the Show Cause Notice that there was suppression or mis-declaration and obviously the appellant was filing returns regularly and therefore, the Revenue could have easily found that interest was not paid and Service Tax has been paid late. - Decided in favor of assessee.

Summary

Issues: Limitation period for demanding interest on Service Tax payment.

Analysis:
The appellant made belated Service Tax payments for GTA services during 2004-2005 to 2008-2009 but did not pay the interest due as required by law. A Show Cause Notice was issued demanding interest of Rs.42,657 beyond the normal 1-year limitation period. The appellant argued that since there was no allegation of suppression or mis-declaration in the notice, the principle of limitation for demanding the principal amount should also apply to interest recovery. The Tribunal agreed, stating that the notice was issued beyond the 1-year period without any indication of suppression, and since the appellant regularly filed returns, the Revenue could have easily identified the late payment. Citing the case of Sharavathy Conductors Pvt. Ltd. Vs. CCE Bangalore, the Tribunal ruled in favor of the appellant solely on the ground of limitation, allowing the appeal and providing consequential relief.

This judgment primarily revolves around the issue of the limitation period for demanding interest on belated Service Tax payments. The appellant had paid the Service Tax for GTA services late but did not pay the interest due. The Show Cause Notice issued demanding interest was beyond the normal 1-year limitation period. The appellant's counsel argued that since there was no allegation of suppression or mis-declaration, the principle of limitation for demanding the principal amount should also apply to interest recovery. The Tribunal agreed with this argument, emphasizing that the notice was issued beyond the 1-year period without any indication of suppression, and the appellant regularly filed returns, making it easy for the Revenue to identify the late payment. By referencing the case of Sharavathy Conductors Pvt. Ltd. Vs. CCE Bangalore, the Tribunal concluded that the appellant succeeded solely on the ground of limitation, leading to the allowance of the appeal and providing consequential relief to the appellant.