2006 (2) TMI 20 - AT - Service Tax

Service Tax Service tax paid prior to issue of show cause notice is not liable to interest

Summary

Issues involved: Confirmation of levy of interest for delayed payment of Service Tax, non-levy of penalties when duty is paid before the issue of show cause notice, judicial indiscipline in not following binding judgments.

Confirmation of levy of interest: The appeal arose from an Order-in-Appeal confirming the levy of interest for delayed payment of Service Tax. The appellants argued that they had paid the tax before the show cause notice was issued, citing relevant judgments. The learned Counsel emphasized that penalties should not be imposed in such cases based on Apex Court rulings and urged for setting aside the penalties imposed by the Commissioner.

Non-levy of penalties: The Counsel highlighted the finality of the Apex Court confirming the Tribunal's ruling on non-levy of penalties when duty is paid before the issuance of a show cause notice. Any judgments contrary to this should not have effect, and the Apex Court's decision must be followed. The Counsel stressed the binding effect of the Karnataka High Court judgment and argued that the penalties imposed by the Commissioner should be overturned.

Judicial indiscipline: The Tribunal noted the attempts to distinguish judgments of higher courts and the Larger Bench, stating that subordinate courts should not challenge final decisions. The Tribunal emphasized its obligation to follow the Apex Court and Larger Bench judgments, setting aside the Commissioner's orders confirming interest and penalties, as they were deemed not in accordance with the law.

The Tribunal concluded by allowing all the appeals and setting aside the impugned orders, emphasizing adherence to binding judgments and the law.