2017 (6) TMI 1026 - AT - Service Tax

Liability of interest - delayed payment of service tax - Held that - The total amount of service tax paid by the appellant on 30.03.2017 is ₹ 1,26,41,442/-. If this amount includes any demands pertaining to the services rendered to BALCO which stand set aside by the Tribunal vide its order dated 10.03.2017, there can be no demand of interest in terms of Section 75 inasmuch as the tax demand itself does not survive. However, for the rest of the amounts paid by the appellant beyond the period specified in the statute for making such service tax payment, the interest liability in terms of Section 75 is to be upheld - it is necessary to remand the matter to the adjudicating authority for purposes of verification and determining the quantum of service tax which has been paid with delay - appeal allowed by way of remand.

Summary

Issues:
Recovery of interest on delayed payment of service tax.

Analysis:
The case involves an appeal against an order passed by the Commissioner (Appeals) Raipur regarding the recovery of interest on delayed payment of service tax by a PSU engaged in electricity generation and provision of services. The appellant had paid a significant amount for taxable services for the period September 2004 to February 2005, and interest was demanded due to delayed payment. The appellant argued that the service tax amount paid was related to a dispute over services rendered to another company, which had been settled in their favor by the Tribunal in a separate proceeding. The Department contended that the entire amount paid was not related to the disputed services and that interest was still payable. The Tribunal noted that the service tax demand for the disputed services had been set aside in a previous order, and any amount paid for those services should not attract interest. However, for the remaining amount paid beyond the specified period, interest liability under Section 75 was upheld. The case was remanded to the adjudicating authority for verification and determination of the correct quantum of service tax paid with delay, excluding the portion related to the services already set aside by the Tribunal.

The Tribunal considered the provisions of Section 75 of the Finance Act, 1994, which mandate the payment of interest for delayed service tax payments. The appellant argued that since the disputed service tax had been held as not payable in a previous Tribunal order, the interest demand should also be set aside. The Department contended that the entire amount paid was not related to the disputed services and interest was still due. The Tribunal held that if the amount paid included demands for services rendered to the other company, which had been set aside in the previous order, no interest should be demanded for that portion. However, for the remaining amount paid beyond the specified period, interest liability was upheld under Section 75.

In conclusion, the Tribunal set aside the impugned order and remanded the case to the adjudicating authority for a fresh decision. The Tribunal allowed the admission of additional evidence as per the law and emphasized the need for verification to determine the correct quantum of service tax paid with delay, excluding the amount related to the services already set aside in the previous Tribunal order.