2005 (2) TMI 1 - AT - Service Tax

Service Tax Payment of excess service tax and less service tax for some era initiate as finalizing the provisional assessment Interest on delayed payment of service tax

Summary

Issues:
1. Provisional assessment under Rule 6 of Service Tax Rules.
2. Payment of excess and less service tax by the appellant.
3. Imposition of interest during finalization of assessment.
4. Adjustment of excess service tax against short payment.
5. Applicability of interest provision under Rule 6 of Service Tax Rules.

Analysis:
1. The appellant, a subsidiary of General Insurance Corporation of India, filed an appeal against the order-in-appeal passed by the Commissioner (Appeals) regarding provisional assessment under Rule 6 of Service Tax Rules for the period April 1997 to March 2000.

2. It was found that the appellant had paid excess service tax for some periods and less service tax for others. The Commissioner (Appeals) directed the appellant to file refund claims for excess payment and pay the differential amount along with interest for short payment.

3. The appellant contended that during the relevant period, there was no provision for imposing interest at the time of finalization of assessment. They argued that the provisions for interest were introduced under Rule 7 of Central Excise Rules, 2001, effective from 1-7-2001, which was after the period in dispute.

4. The Tribunal noted that the appellant requested provisional assessment, and after finalization, it was established that excess and less service tax was paid for different periods. The excess payment was to be adjusted against the short payment, as per the assessment order dated 13-6-2000.

5. Additionally, the revenue sought interest for late payment of service tax. However, the Tribunal observed that Rule 6 of Service Tax Rules, 1994, which governed provisional assessment during the relevant period, did not include provisions for interest on short payment. Since the period in question was April 1997 to March 2000, the introduction of interest provisions from 1-7-2001 did not apply. Therefore, the demand for interest was set aside, and the appeal was allowed.