2013 (10) TMI 1014 - AT - Service Tax

Stay application - Interest liability - Short payment of the service tax - Held that - appellant has not contested the service tax liability before the adjudicating authority. It is also seen from the records that the appellant has paid of the entire service tax liability after almost two years. In our view, as the appellant has not contested the service tax liability before the adjudicating authority, they should be directed to deposit the amount of interest which is due to the government on such delayed payment of service tax. On a specific query from the Bench, both sides are unable to say what would be the exact amount of interest liability on such amount. Taking rough calculation of 13% of interest on the amount per annum on short payment, we direct the appellant to deposit an amount of Rs.10 lakhs within four weeks from today and report compliance before the Deputy Registrar on 20.08.13. Deputy Registrar after ascertaining the compliance, will place the files for passing appropriate order on 27.08.13. Subject to such compliance being reported, application for the waiver of pre-deposit of the balance amounts involved is allowed and recovery thereof stayed till the disposal of appeal.

Summary

Issues: Service tax liability for the year 2009-10, imposition of penalty under Section 78 of the Finance Act, 1994, delayed payment of service tax, calculation of interest on delayed payment.

Analysis:
1. Service Tax Liability and Penalty Imposition:
The appellant's counsel acknowledged the service tax liability due to short payment for the year 2009-10. However, it was noted that the appellant did not contest this liability before the adjudicating authority. The Tribunal observed that the appellant had paid the entire service tax liability after a significant delay of almost two years. Consequently, the Tribunal directed the appellant to deposit the amount of interest due to the government on the delayed payment of service tax. Despite the lack of contestation by the appellant, the Tribunal allowed the application for the waiver of pre-deposit of the balance amounts involved, with recovery thereof stayed until the appeal's disposal.

2. Calculation of Interest on Delayed Payment:
During the proceedings, both parties were unable to provide the exact amount of interest liability on the delayed payment of service tax. To address this, the Tribunal made a rough calculation of 13% interest per annum on the short payment amount. As a result, the appellant was directed to deposit an amount of Rs.10 lakhs within four weeks and report compliance to the Deputy Registrar. The Deputy Registrar would then ascertain the compliance and place the files for passing an appropriate order. Subject to the compliance being reported, the application for the waiver of pre-deposit of the balance amounts involved was allowed, and recovery was stayed until the appeal's final disposal.

This judgment highlights the importance of timely payment of service tax liabilities and the consequences of delayed payments, including the imposition of interest by the government. It also underscores the significance of contesting tax liabilities before the adjudicating authority to ensure a fair resolution of disputes.