2004 (12) TMI 3 - AT - Service Tax

Service Tax Service tax deposited under the direction of High Court Interest not chargeable

Summary

Issues:
1. Imposition of interest on service tax due from Chartered Accountants.
2. Interpretation of High Court's order regarding non-imposition of penalty on Chartered Accountants.
3. Distinction between penalty and interest in fiscal statutes.

Analysis:
1. The case involves a dispute over the imposition of interest on service tax due from Chartered Accountants. The respondents, who are Chartered Accountants, had filed a writ petition challenging the levy of service tax. The High Court granted interim relief staying the tax recovery but later directed the respondents to pay the tax by a specified date. The tax arrears were paid before the deadline. The original adjudicating authority did not impose a penalty but charged interest on the service tax, stating that penal action does not include interest. The respondents sought clarification from the High Court, which indicated that the intention was to protect against adverse consequences from delayed payment of tax.

2. The Commissioner (Appeals) allowed the appeal filed by the respondents, citing the High Court's clarificatory order that the directions not to impose penal action included non-levy of interest. The revenue contended that penalty and interest are distinct provisions under the law, relying on a Supreme Court decision highlighting the differences between tax, penalty, and interest. The revenue argued that in the absence of specific directions from the High Court, interest should be charged independently.

3. The Judge considered the submissions and the High Court's order, emphasizing that the High Court intended to protect against adverse consequences from delayed tax payment. The Judge noted that the service tax was deposited by the specified date and highlighted that the revenue was contemplating an appeal against the High Court's order on interest levy. The Judge concluded that the interest was not to be charged based on the High Court's order and the provisions of Section 75. Therefore, the Judge rejected the Revenue's appeal, finding no merit in their argument regarding the imposition of interest on the service tax due from the Chartered Accountants.