2015 (11) TMI 652 - AT - Service Tax

Delay in payment of service tax - GTA Service - Non payment of interest - Imposition of penalty - Power of AC / DC to adjudicate the case u/s 83A where the amount involved is more than ₹ 5,00,000/- Held that - Section 83A is applicable only when penalty is to be adjudged. It is not applicable to amount of tax. - CA has not contested the interest which has already been paid and which is liable to be paid as per the recent decision of the Hon ble High Court of Bombay wherein it has been held that interest becomes automatically payable once the principal is paid even they demand. - demand for interest is upheld and penalty is set aside. - Decided partly in favour of assessee.

Issues:
1. Delayed payment of Service Tax by the appellant.
2. Imposition of penalties under Section 76 of the Finance Act, 1994 and Rule 7C of Service Tax Rules, 1994.
3. Interpretation of Section 83A of Finance Act, 1994 and Notification No. 30/2005-S.T. regarding adjudication powers based on the amount involved.
4. Validity of proceedings based on the amount of Service Tax specified in the show cause notice.
5. Applicability of Section 83A to penalty adjudication.
6. Payment of interest by the appellant.
7. Decision on interest demand and penalty.

Analysis:

1. The appellant, engaged in manufacturing refractory bricks, faced delays in paying Service Tax over two years. The delays extended to filing returns and making payments, leading to penalties under Section 76 of the Finance Act, 1994 and Rule 7C of Service Tax Rules, 1994. The total penalty imposed was &8377; 13,68,399/- under Section 76 and &8377; 2,000/- under Rule 7C. Despite belated tax payments, interest was not fully deposited until the matter reached the Tribunal, where the entire interest was paid as per the Tribunal's direction.

2. The Tribunal considered the grounds presented by the appellant's CA and emphasized that even though multiple grounds were raised, addressing one ground would suffice to decide the appeal, thereby not delving into all the grounds mentioned.

3. A critical issue revolved around the interpretation of Section 83A of the Finance Act, 1994, and Notification No. 30/2005-S.T. concerning the adjudication powers based on the amount involved. The appellant's CA argued that the original authority lacked jurisdiction to adjudicate the case due to the amount exceeding &8377; 5,00,000/- as specified in the show cause notice.

4. The Tribunal analyzed the provisions of Section 83A and the notification, highlighting that the original authority could not have adjudicated the case as the total Service Tax amount in the notice exceeded &8377; 5,00,000/-. This discrepancy rendered the entire proceedings invalid.

5. The AR contended that Section 83A applies to penalty adjudication, not the tax amount. However, even if the penalty proposed was below &8377; 5,00,000/-, the penalty mentioned in the show cause notice was &8377; 13,68,399/-, making the proceedings invalid based on the amount involved.

6. The CA did not dispute the interest payments made by the appellant, citing a recent decision by the Bombay High Court where interest becomes automatically payable once the principal is paid, even if demanded.

7. Consequently, the Tribunal upheld the demand for interest payment but set aside the penalty, concluding the judgment in open court.

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