2008 (5) TMI 273 - HC - Service Tax

Delayed payment of service tax - respondent submitted that the amount was deposited in time, but on account of delay in allotting head of account there was delay of 4 days in crediting - Whatever be the reason for the belated payment, provision for interest containing Section 75 is mandatory - tribunal cancelled the interest on the assumption that the demand made is penalty - Additional Commissioner waived penalty and demanded is only in the form of interest u/s 75 revenue s appeal allowed by cancelling the order of the Tribunal

Summary

The High Court of Kerala upheld the demand for interest under Section 75 of the Finance Act, 1994, against a Government Department for delayed payment of service tax by four days due to a delay in allotting a head of account for payment. The court found the provision for interest to be mandatory, not a penalty, and reversed the Customs, Excise and Service Tax Appellate Tribunal's decision to cancel the interest. The court ordered the deposit made to be adjusted towards the liability without charging any additional interest.