2005 (2) TMI 333 - AT - Central Excise

Summary

Issues: Recovery of interest on delayed crediting of Service Tax collected by a Public Sector Undertaking.

In this judgment by the Appellate Tribunal CESTAT, Bangalore, the issue revolved around the recovery of interest by the Revenue from the appellants, a Public Sector Undertaking, for delayed crediting of Service Tax collected from telephone subscribers to the Government of India. The appellants argued that they followed the prescribed procedure of the Department of Telecom and Department of Posts, and the delay was due to the Audit Office of the Central Government not transferring the amounts promptly. The Tribunal noted a previous ruling in the appellants' case where it was held that the delay in transfer between departments did not make the appellant liable for interest payment.

The Tribunal considered the submissions and referred to the previous ruling in the appellants' case, emphasizing that the appellant, being a Central Government Department, followed the prescribed procedures for crediting amounts received from subscribers towards telephone charges and service tax. The Tribunal highlighted that the delay was due to the system in place and the amounts were deposited on a day-to-day basis. Based on this, the Tribunal concluded that the appellant cannot be held liable to pay interest and set aside the impugned order, allowing the appeal.

Furthermore, the Tribunal mentioned that the Board had acknowledged the delay in deposit by the Telegraph Authorities and had issued fresh instructions, withdrawing the earlier Circular. Citing this change in position, the Tribunal held that the confirmation of interest in the impugned order was not proper and legal. Consequently, the Tribunal set aside the order, allowing the appeal with any consequential relief. The operative portion of the Order was pronounced in open Court at the conclusion of the hearing.