2014 (7) TMI 34 - AT - Service Tax

Levy of penalty - delayed payment of service tax - Clearing and Forwarding Services, Port Services, Goods Transport Agency Service - Held that - there is a case of delayed payment of service tax. However, the same has been paid before issue of SCN. The assessee has explained the reason for delay, due to the fact that earlier OIO No.92/2007 dt . 25.5.2007 was appealed before the Tribunal and a batch of similar cases was pending before the Larger Bench for its decision. There is no material available that the appellant deliberately delayed payment of duty. Since service tax and interest was paid before issue of SCN, the instant case, the case is covered under Section 73 (3) of the Finance Act, 1994, the case merits for waiver of penalty. However, as regards the demand of interest, the adjudicating authority has rightly held that they have paid interest only on the service tax paid in cash but not on the tax amount adjusted through cenvat account. Therefore, interest liability calculated on the entire amount of service tax is payable - Differential amount of interest confirmed however, penalty is set aside - Decided partly in favour of assessee.

Summary

Issues:
Delayed payment of service tax, imposition of penalty under Section 76 of the Finance Act, 1994, applicability of Section 73(3) of the Act, payment of interest on service tax amount paid through cenvat account.

Analysis:
The appellant, registered under Service Tax Commissionerate, Chennai, faced a delayed payment of service tax amounting to Rs.3,72,53,983/- for the period from June 2008 to July 2008. Despite paying the due amount and interest before the issuance of the show cause notice, a penalty under Section 76 was imposed by the Commissioner, leading to the appellant's appeal before the Tribunal.

The appellant's representative argued that the delay was due to the re-determination of taxable value after collecting necessary documents, asserting compliance with Section 73(3) of the Act. Citing relevant circulars and legal precedents, the appellant contended that the interest was correctly calculated and paid.

On the contrary, the Revenue representative argued that the payment was not voluntary, as it was made upon audit detection, emphasizing the mandatory nature of penalty under Section 76. The Revenue also highlighted the non-payment of interest on the cenvat account-adjusted tax amount.

Upon careful consideration, the Tribunal found that the delayed payment was justified due to ongoing legal proceedings and lack of deliberate delay by the appellant. Referring to legal interpretations and precedents, the Tribunal concluded that the case fell under Section 73(3) of the Act, warranting a waiver of penalty but requiring payment of the differential interest amount.

In alignment with previous decisions favoring the assessees in similar circumstances, the Tribunal partially allowed the appeal by setting aside the penalty under Section 76 and confirming the payment of the differential interest amount. The judgment was pronounced on 20/06/2014, emphasizing the importance of compliance with statutory provisions and fair application of penalties and interest liabilities.