2016 (5) TMI 785 - AT - Service Tax

Demand of interest - Appellant contended that no interest is recoverable in such a situation where it did not receive the amount from SAIL as SAIL directly made the payments to the sub-contractors and the interest is chargeable with reference to the date of receipt of the payments. Held that - SAIL made some of the payments directly to the sub contractor as per the High Court s order but such payments were made obviously on behalf of the appellant. It was for this reason that the sub-contractors did not ask the appellant to make payments for services rendered (as per sub-contracts between them and the appellant) for which they directly got payments from SAIL and the appellant also did not ask SAIL to pay it for the services rendered as per its contracts with SAIL for which SAIL directly paid to the sub-contractors. Thus it was the appellant liability towards the sub contractors which was being discharged by SAIL by making direct payments to sub-contractors. So, the appellant was deemed to have received those payments and therefore was liable to pay interest in case service tax relating to such payments was paid later than the due date. - Decided against the appellant

Summary

Issues:
Appeal against order confirming service tax demand, education cess, and interest. Appellant contests only the demand of interest.

Analysis:
The appeal was filed against an order confirming a service tax demand, education cess, and interest. The appellant contested only the demand of interest, not the service tax or education cess. The appellant had entered into contracts with a company and also sub-contracted some services. The company made payments directly to the sub-contractors as per a court order. The appellant argued that since it did not receive these direct payments, it should not be liable for interest. However, the tribunal found that the services were rendered to the company as per the contracts, and the direct payments to sub-contractors were made on behalf of the appellant. The tribunal noted a court order where the appellant was the judgment debtor and the sub-contractor was the decree holder, indicating the liability of the appellant towards the sub-contractors. Therefore, the tribunal held that the appellant was deemed to have received those payments and was liable to pay interest if the service tax was paid later than the due date.

The tribunal concluded that there was no infirmity in the order under appeal that would warrant appellate intervention. As a result, the appeal was dismissed.