2003 (10) TMI 210 - AT - Central Excise

Summary

Issues:
1. Appeal against the Order-in-Appeal upholding interest amount for belated service tax remittance.
2. Applicability of interest on belated payments by a Central Government department.
3. Interpretation of the Tribunal decision in a similar case regarding interest charges.

Analysis:
1. The appeal challenged the Order-in-Appeal upholding an interest amount for belated service tax remittance by M/s. Chennai Telephones for certain months between August 1994 and September 1998. The Commissioner of Central Excise (Appeals), Chennai confirmed the interest amount of Rs. 48,25,578 under Section 75 of the Finance Act, 1994.

2. The appellant argued that during the relevant period, Chennai Telephones, as a Central Government department, deposited tax daily, and thus, no interest should be levied on them for that period. They relied on a Tribunal decision in G.M. Telecom BSNL v. CCE, Chandigarh, stating that no interest can be charged on Central Government departments for belated payments. The appellant further pointed out the corporatization of the Department of Telecom Services into Bharath Sanchar Nigam Ltd. (BSNL) from November 1, 2000, as per CBEC Service Tax Circular No. 33-1-2001.

3. The Revenue, represented by ld. DR Shri C. Mani, reiterated the department's stance that there was a delay in remitting the service tax amount to the Central Government based on the dates of journal slips issued from October 5, 1994, to October 14, 1998. The appellant countered by emphasizing that the Department of Telecommunication was a Central Government department until its conversion into BSNL on November 1, 2000, and therefore, no interest should be charged for belated payments during the earlier period.

4. The Tribunal considered both parties' submissions and noted that during the period when the journal slips were issued (October 5, 1994, to October 14, 1998), the Department of Telecommunication Services was a Central Government Department. Referring to the Tribunal decision in G.M. Telecom BSNL v. CCE, Chandigarh, it was established that no interest could be charged on telephone services for delays in crediting service tax prior to March 1999 for Central Government departments. As Chennai Telephones, being a Central Government Department at the material time, deposited service tax daily into the Consolidated Fund of India, the Tribunal set aside the impugned order and allowed the appeal.

This detailed analysis of the judgment highlights the key arguments, legal interpretations, and the final decision rendered by the Appellate Tribunal CESTAT, Chennai, preserving the legal terminology and significant details from the original text.