2013 (10) TMI 629 - AT - Service Tax

Levy of interest - CENAVT Credit - Suppression of facts - Delhi International Airport construction and implementation - Self adjustment of CENVAT Credit - Held that - Even though the claim of the appellant that CENVAT credit was available in the books and therefore interest could not have been levied from that date looks logical, unfortunately unless the CENVAT credit available in the books is debited, legally it cannot be said that the service tax has been paid. The actual debit in the CENVAT account took place only in November 2008 and the question that arises is whether the appellant is liable to pay interest for two years on this portion of the amount. Unfortunately, legally appellants do not seem to have a case and therefore in our opinion, appellant is required to be put to terms for at least interest portion - stay granted party.

Summary

Issues: Condonation of delay in filing the appeal, Liability for service tax, Interest calculation, Imposition of penalties

Condonation of Delay: The appellant sought condonation of a 120-day delay in filing the appeal due to the order being sent to the old address and not received by them. The appellant's claim regarding the delay was found valid by the tribunal, and the delay was condoned.

Liability for Service Tax: The appellant, part of a consortium for Delhi International Airport construction, received amounts from a special purpose vehicle (SPV) formed for the project. In 2008, the appellant paid service tax of over Rs.5.21 crores after adjusting CENVAT credit. The Department alleged suppression of facts, demanded interest, and imposed penalties. The appellant argued that they paid the service tax and interest in full, and penalties should not have been imposed as they voluntarily paid the tax. The tribunal noted that unless the CENVAT credit was debited, it cannot be said that the service tax was paid. The tribunal found the appellant liable for interest and directed them to deposit Rs.25 lakhs within six weeks.

Interest Calculation: The tribunal considered the appellant's argument that interest liability should be reduced due to the CENVAT credit available in their account. However, legally, the service tax was considered paid only when the CENVAT account was debited in November 2008. The tribunal found the appellant liable for interest for the period before the debit in the CENVAT account and directed them to deposit Rs.25 lakhs within six weeks.

Imposition of Penalties: The Department imposed penalties under Sections 77 & 78. The appellant argued that penalties should not have been imposed as they voluntarily paid the service tax. The tribunal did not find merit in the appellant's argument and upheld the imposition of penalties.

In conclusion, the tribunal condoned the delay in filing the appeal, found the appellant liable for interest, directed them to deposit Rs.25 lakhs, and upheld the imposition of penalties under Sections 77 & 78.