2015 (1) TMI 228 - AT - Service Tax

Waiver of predeposit of interest and penalties - Assessee not able to collect the data from filed units - Assessee could not arrive the correct amount of service tax to be paid but, subsequently worked out the actual service tax and paid the service tax by way of debiting it from the cenvat credit account and also filed the revised ST-3 returns - Demand of differential duty - Held that - adjudicating authority has demanded the interest of ₹ 15,88,761/- for the belated payment of differential service tax paid subsequently due to delay in collecting data from field units. It is noticed that the appellants followed this method of arriving final taxable value and subsequently paying the differential service tax and continued this practice from October, 2007 to March, 2011. It is seen from the annexure-I to show cause notice that the short payment of service tax and delay varied from 70 days to 260 days for each month of due date of payment. The Adjudicating Authority also confirmed the demand of interest of ₹ 2,77,347/- on the in-eligible credit availed by the appellants and subsequently reversed. The number of days from the date of credit availed and credit reversed varies from 100 days to 258 days. - applicant is failed to make out a strong prima facie case for waiver of predeposit of entire amount of tax along with interest and penalty - Partial stay granted.

Summary

Issues:
1. Waiver of predeposit of interest and penalties under various sections of the Finance Act, 1994 and Cenvat Credit Rules, 2004.

Analysis:
The applicant, a telecom service provider, filed for waiver of predeposit of interest and penalties amounting to &8377; 15,88,761/- and &8377; 2,77,347/-, respectively, confirmed by the adjudicating authority. The demand was based on differential service tax paid subsequently and wrong credit availed. The applicant argued that they had sufficient credit balance and no loss to the Government occurred. They contended that interest on the differential service tax was not payable as they rectified the tax amount promptly. Additionally, they claimed that the interest on the in-eligible credit was reversed immediately, citing legal precedents to support their case. On the contrary, the Revenue argued that interest is mandatory as per Section 75 if tax is not paid on the due date, referencing various Supreme Court judgments to support their stance.

The Tribunal noted that the appellant had a history of delayed payment of service tax due to difficulties in collecting data, resulting in interest demands ranging from &8377; 15,88,761/- to &8377; 2,77,347/-. The adjudicating authority's decision was based on the time lapses in payment and credit reversal, varying from 70 to 260 days and 100 to 258 days, respectively. The Tribunal acknowledged the appellant's reliance on a Karnataka High Court decision but distinguished it with a Madras High Court ruling, emphasizing the importance of timely credit reversal. The Tribunal emphasized that any delayed tax payment incurs mandatory interest, as established by legal precedents.

Ultimately, the Tribunal found that the appellant failed to establish a strong prima facie case for the waiver of the entire tax amount, interest, and penalties. Consequently, the appellant was directed to predeposit a sum of &8377; 2,00,000/- within four weeks, with the remaining amount subject to waiver upon compliance. The recovery of the balance amount was stayed pending the appeal's disposal, aligning with the legal requirement of interest payment on delayed tax amounts.