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2023 (8) TMI 58 - HC - Service TaxSVLDRS - Levy of interest for part payment - Seeking to review the case in terms of section 110 of the Finance Act 2013 - benefit of Service Tax Voluntary Compliance Encouragement Scheme availed - recovery of interest for the entire tax liability of Rs. 57,89,270/-, whereas the belated payment was only 13,89,270/- - contention of the respondents is that once the declarant violated the conditions of the scheme he is not entitled to the benefits of the scheme - HELD THAT - Section 110 states fails to pay tax dues, either fully or in part, such dues along interest shall be recovered . The respondents interpret it fully tax liability . This Court is of the considered opinion that on the comprehensive reading of the section would clearly indicate the phrase such dues would definitely mean the unpaid portion only. Since only the unpaid portion alone can be considered as dues . The respondents are adding words which is not found in the section. If the interpretation of the respondents is taken, then the same would attract the principle of Casus Omissus . Therefore, the section states interest in leviable for the unpaid portion alone. Moreover in tax laws if two interpretations are possible then the one which is advantageous to the assessee ought to be applied as held by the Hon ble Three Judges Bench of Supreme Court vide its judgment dated 27.05.1997 in the case of Commissioner of Income Tax Bombay etc. Vs. Podar Cement Pvt. Ltd. etc. 1997 (5) TMI 2 - SUPREME COURT held that Assuming that there are two possible interpretations on Section 22 of the Act, which is akin to a charging Section, it is well settled, that the one which is favourable to the assessee has to be preferred. Even on that principle the view taken by the High Courts of Patna, Punjab and Haryana, etc. has to be preferred rather than the contrary view taken by the High Courts of Delhi and Andhra Pradesh. In the present case, even if two interpretations are possible then the one which is favourable to the assessee has to be preferred. Therefore, on this ground also the petitioner is entitled to relief. Generally, the respondents levy interest for the unpaid portion of the tax liability. Even as per tax laws, when the portion of the tax liability is paid the respondents cannot levy interest for the entire tax liability. If the respondents are allowed to levy interest for the entire tax liability, when the portion of the tax is paid, then the same is without any authority of law - In the present case, the petitioner has paid 90% of the tax liability, but failed to pay the balance amount, then the petitioner is liable to pay interest for the balance amount alone. This Court is of the considered opinion that the interest cannot be levied for the entire amount of Rs. 57,89,270/-. This impugned order, dated 23.08.2022 is hereby quashed. Consequently, the respondents shall recalculate the interest portion for the amount of Rs. 13,89,270/- and recover the same. Once the petitioner has paid the interest for the balance amount of Rs. 13,89,270/-, the respondents shall release the attachment of bank account - Petition allowed.
Issues:
The judgment involves the interpretation of the Finance Act, 2013 regarding the payment of tax dues under an amnesty scheme, specifically focusing on whether interest should be levied on the entire tax liability or only on the unpaid portion. Details of the Judgment: Issue 1: Payment under the Amnesty Scheme The petitioner, a firm engaged in civil construction work, participated in the "Service Tax Voluntary Compliance Encouragement Scheme" under the Finance Act, 2013. The petitioner declared a tax liability of Rs. 57,89,270 and made partial payments according to the scheme's conditions. The dispute arose when the petitioner failed to pay the balance amount on time and interest was imposed on the entire tax liability by the respondents. Issue 2: Interpretation of the Finance Act, 2013 The respondents argued that the petitioner forfeited the benefits of the scheme by not adhering to the payment conditions, making them liable for interest on the entire tax liability. They relied on Section 108 of the Finance Act, 2013, which grants immunity from penalties and interest only if the tax dues are paid in full and on time. The respondents contended that strict adherence to the scheme's terms is necessary, as per the Kerala High Court's ruling in Kasmisons Builders Pvt Ltd. Vs Assistant Commissioner of Service Tax. Issue 3: Interpretation of Section 110 of the Finance Act, 2013 The petitioner invoked Section 110 of the Finance Act, 2013, which states that interest shall be recovered for the unpaid tax dues. The court interpreted this provision to mean that interest should be levied only on the unpaid portion of the tax liability, not the entire amount. Citing the principle that interpretations favoring the assessee should be applied, the court emphasized that the petitioner should only be liable for interest on the outstanding balance. Conclusion: The court held that interest cannot be levied on the entire tax liability of Rs. 57,89,270. The impugned order was quashed, directing the respondents to recalculate the interest only for the unpaid amount of Rs. 13,89,270. Once this interest is paid, the attachment of the petitioner's bank account should be released. The writ petition was allowed with no costs, and connected miscellaneous petitions were closed.
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