2021 (12) TMI 334 - AT - Central Excise

Demand of interest and penalty - entire amount of cenvat credit or service tax payable by them paid before issuance of the show cause notice, but interest was not paid - HELD THAT - It is a fact on record that audit took place during 3rd February to 13 February 2015 for the year 2013-14 if audit could not take place then availment of inadmissible cenvat credit and non payment of service tax on legal services could not be revealed. Further, the show cause notice has been issued within one year from the completion of the audit by the audit party on 11.02.2016. In these circumstances, it is held that the show cause notice has been issued within time. Further, as admitted by Shri Ashok Kumar Sikka appearing on behalf of the appellant that they have not paid the interest for the intervening period which is required to be paid by them, therefore, the demand of interest is confirmed. Penalty - HELD THAT - In terms of Section 11AC of the Act if the demand of duty, interest are not paid within 30 days from the date of adjudication order, in that circumstances, the penalty is payable by the appellant. Therefore, the appellant is liable to pay penalty also. Appeal dismissed - decided against appellant.

Summary

Issues:
Appeal against demand of interest and penalty raised, Barred by limitation defense, Imposition of interest and penalties, Admissibility of cenvat credit and payment of service tax on legal services, Timeliness of show cause notice issuance.

Analysis:
The appellant appealed against an order demanding interest and penalty. The case involved a show cause notice issued in 2016 for the financial year 2013-14, concerning denial of cenvat credit on services and non-payment of service tax on legal services. The appellant had paid the service tax but not the interest demanded. The appellant argued that the notice was time-barred, as the demand pertained to 2013-14, and the notice was issued in 2016. The appellant contended that since they paid the service tax before the notice, interest and penalties should not apply. The authorized representative countered, stating that the audit in 2015 revealed inadmissible cenvat credit and non-payment of service tax, justifying the interest and penalties. The Tribunal found the notice timely, issued within a year of the audit, and upheld the demand for interest due to non-payment by the appellant.

Regarding penalties, the Tribunal referred to Section 11AC of the Act, stating that if duty and interest are not paid within 30 days of the adjudication order, penalties are applicable. As the appellant did not pay the interest, penalties were rightfully imposed. The Tribunal dismissed the appeal, concluding that the appellant was liable for interest, penalties, and the original demand. The decision was based on the timely issuance of the notice, the appellant's admission of non-payment of interest, and the statutory provisions regarding penalties for non-payment within the stipulated period.