2008 (1) TMI 87 - AT - Service Tax

Service tax not paid during the period when stay was granted - but as the stay was vacated service tax was paid - payment of Service Tax was stayed on 3.2.99 and vacated on 20.12.2000 - Service Tax for the period from Jan.99 to March,99 was covered by the stay, but even before the stay was vacated service tax for this period was paid-date of payment was 18.1.2000 interest not payable for period of stay revenue s appeal allowed

Summary

Issues:
- Appeal against Commissioner's order on liability for interest on delayed payment of Service Tax
- Applicability of stay order by the High Court on payment of Service Tax for a specific period
- Interpretation of judgments by different High Courts regarding liability for interest on delayed payment

Analysis:
1. The appeal was filed by the Revenue against the Commissioner's order regarding the liability of the assessee for interest on delayed payment of Service Tax. The Commissioner had held that interest was only applicable for the period from April to Sept.99, excluding the period from January 1999 to March 1999, which was covered by a stay order issued by the Hon'ble Madras High Court in a specific Writ Petition. The Tribunal noted that the payment of Service Tax was stayed on 3.2.99 and vacated on 20.12.2000. Although the Service Tax for the period Jan.99 to March,99 was covered by the stay order, the assessee paid the tax on 18.1.2000 even before the stay was vacated. The Tribunal observed that the non-payment during that period was not due to delay by the assessee but because they were protected by the High Court order.

2. The Tribunal agreed with the Commissioner's decision that the assessee was not liable for interest for the period Jan. to March, 1999, as the delay in payment was due to the High Court's stay order. The Revenue's reliance on a judgment of the Hon'ble Bombay High Court in another case did not support their argument. The Tribunal referenced the judgment in the case of All India Federation of Tax Practitioners, where the Court directed that compliance with statutory formalities and payment of arrears of service tax with interest by a specified date would prevent penal action. However, this judgment did not favor the Revenue's case in the present appeal.

3. Based on the discussions and analysis, the Tribunal found no grounds to interfere with the Commissioner's order. Therefore, the Tribunal upheld the decision of the Commissioner and dismissed the appeal filed by the Revenue.