2008 (11) TMI 114 - AT - Service Tax

Demand of interest and penalty - Non-payment of service tax on freight charges paid to the GTO during the period 16.11.97 to 2.6.98 - Appellants paid the tax on 31.01.2004, 11.4.2004, 3.3.2004 and 5.3.2004 for the above period - held that the recipient of G.T.O. services are liable to pay interest from 29.11.2003 till date of payment of service tax in view of the date of assent of the President to Section 71A of Finance Act, 1994 - no penalty would be imposable u/s 76

Summary

Issues:
Demand of interest and penalty on delayed payment of service tax by the Appellants.

Analysis:
The case involved a dispute regarding the demand of interest and penalty on the Appellants for not discharging their service tax liability on freight charges paid to Goods Transport Operators during a specific period. The Tribunal referred to previous decisions and highlighted that the recipient of such services is liable to pay interest from a certain date until the payment of service tax, as per the Finance Act, 1994. The Tribunal relied on case laws like Unikeller India Pvt. Ltd. Vs. CCE, Jaipur-I and Ginni International Ltd. Vs. CCE, Jaipur to support their decision.

The Tribunal noted that the appeals in the present case and the mentioned case laws arose from a common impugned order of the Commissioner (Appeals). They specifically referenced the decision in the case of Unikeller India Pvt. Ltd. and quoted a relevant portion to support their conclusion. The Tribunal emphasized that the Finance Act, 2003, made the receiver of services from Goods Transport Operators liable to pay service tax, and any interest liability would accrue if the service tax was not paid within the specified period.

The Tribunal further discussed the Hon'ble Supreme Court's interim order in the case of Gujarat Ambuja Cements Ltd., which granted a two-week extension for filing returns and discharging service tax liability. Based on the Tribunal's analysis and previous decisions, it was concluded that the Appellants were required to pay interest from a specific date until the payment of tax, while the penalty was set aside. The Tribunal agreed with the decisions of the previous cases and disposed of the appeal accordingly.

In conclusion, the judgment by the Appellate Tribunal CESTAT, New Delhi addressed the issues of interest and penalty on delayed payment of service tax by the Appellants. The decision was based on interpretations of relevant provisions of the Finance Act, 1994, and previous case laws, ultimately holding the Appellants liable for interest but setting aside the penalty.