2018 (4) TMI 1037 - AT - Service Tax

Liability of Differential Interest - delayed payment of tax liability - Advertising Agency Service - Held that - Since we are not having the proceedings for tax dispute before us which is admitted atleast for a limited period the interest liability has arrived at by the lower authorities cannot be disputed - appeal dismissed - decided against appellant.

Summary

Issues:
1. Differential interest liability confirmed by lower authorities.

Analysis:
The case involved the appellant disputing the differential interest liability confirmed by the lower authorities in relation to a service tax liability paid by the appellant for the period 2000-2003. The appellant, engaged in advertising in print media and accredited to the Indian Newspaper Society, paid a service tax liability of ?3,14,344/- under the category of "Advertising Agency Service" on their own. Additionally, an interest liability of ?47,814/- was paid by the appellant for the period from October 2002 to 08.02.2008. Subsequently, proceedings were initiated against the appellant to collect the interest not paid for the period of liability, resulting in a differential interest amounting to ?2,76,871/-. The appellant paid the said differential interest under protest, and while the penalty imposed by the original authority was set aside, the interest liability was confirmed by the lower authorities.

The appellant contended that they were not liable to pay service tax as they were not an advertising agency, and therefore, the question of paying interest did not arise. The appellant argued that since no tax was payable, the confirmation of interest should be set aside. However, upon hearing both sides and perusing the appeal records, it was noted that the appellants had indeed discharged the service tax on their own and paid interest for delayed payment of tax liability. The calculation of the quantum of delayed payment of interest was found to be incorrectly done, and the proceedings reflected this error. The Tribunal observed that the appellant had chosen to pay interest only for a part of the delay, leading to confusion as to why such a partial calculation was made. The Tribunal also noted that the appellant seemed to be admitting the tax liability and interest for a limited period, indicating an acknowledgment of the liability. As the proceedings did not involve a tax dispute and the interest liability was based on admitted tax liability for a limited period, the Tribunal held that the differential interest confirmed by the lower authorities could not be disputed. Consequently, the appeal with reference to the differential interest was deemed unsustainable and dismissed.