2018 (5) TMI 785 - AT - Service Tax

Recovery of interest - Section 73 of Finance Act - time limitation - Held that - in absence of invocation of the proviso to Section 73 of the Act the Service Tax or the interest demand should be confined only to the normal period of one year - In this case since the SCN was issued beyond one year from the date of payment of the short fall service tax amount the same is barred by limitation of time. The interest demand cannot sustain on the ground of limitation - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Applicability of Section 73 of the Finance Act, 1994 for recovery of interest amount
- Barred by limitation of time for recovery of interest amount
- Invocation of proviso to Section 73 of the Act for interest demand
- Interpretation of judgments by Hon’ble Delhi High Court

Analysis:

The appeal in question challenges an order passed by the Commissioner (Appeals), GST, Customs and Central Excise, Bhopal, regarding the recovery of interest amount due to short payment of Service Tax by the appellant. The appellant had discharged a Service Tax liability of ?4,30,419/- for the period 2011-12 by debiting its Cenvat Credit account, but as there was no balance available, the amount was deposited later. The Department sought confirmation of an interest amount of ?92,758/- for the short payment, issuing a show cause notice on 11.06.2013.

The appellant argued that the provisions of Section 73 of the Finance Act, 1994 should apply for recovery of the interest amount and contended that the show cause notice issued on 12.02.2016 was time-barred as the differential amount was paid on 11.06.2013. The appellant relied on judgments by the Hon’ble Delhi High Court to support this position.

The Revenue, represented by the ld. DR, maintained that the interest payment was justified due to the delay in the appellant making the Service Tax payment. After hearing both sides and reviewing the records, the Member (Judicial) found that the show cause notice did not invoke the proviso to Section 73 of the Act regarding fraud or wilful misstatement by the appellant. Consequently, the demand for interest should be limited to one year, and since the notice was issued beyond that period, it was time-barred. The Member also noted that judgments by the Hon’ble Delhi High Court supported applying the limitation period for the interest claim.

In conclusion, the Member set aside the impugned order, ruling in favor of the appellant as there were no merits in the decision. The appeal was allowed, and the interest demand was deemed unsustainable due to being barred by limitation and the interpretation of relevant legal provisions and judgments.

This judgment highlights the importance of adherence to statutory provisions, the invocation of relevant legal clauses, and the interpretation of case law to determine the validity of interest demands in tax matters.