2009 (6) TMI 167 - AT - Service Tax

Only prayer of the Applicants is for waiver of pre-deposit of the amount of interest. It is admitted by the Applicants that the Service Tax has been paid after due dates. Their only contention is that during pendency of the Appeal, pre-deposit of the interest on Service Tax be waived by exercising the discretion as the Tribunal is competent to waive the pre-deposit during pendency of appeal - No financial hardship is pleaded before us. - As per the provisions of Finance Act, 1994, if the Service Tax has been paid after due dates, which was collected by Applicants, statutory interest is to be paid for late deposit of the Service Tax and there is no provision under the Finance Act, 1994 for waiver of the amount of interest. Order directing pre-deposit not recalled application dismissed

Summary

Issues:
1. Application for waiver of pre-deposit of interest on Service Tax.
2. Interpretation of provisions of Finance Act, 1994 regarding payment of interest on late Service Tax deposit.
3. Consideration of financial hardship for waiver of pre-deposit.
4. Application of Section 35F of the Central Excise Act in the context of pre-deposit requirements.

Analysis:

1. The Applicants filed an Application seeking waiver of pre-deposit of interest on Service Tax, which was paid after the due dates. The Applicants argued that the Tribunal has the discretion to waive pre-deposit during the pendency of an appeal. However, they did not claim financial hardship. The Revenue contended that as per the Finance Act, 1994, statutory interest must be paid for late Service Tax deposits, and there is no provision for interest waiver.

2. The Tribunal noted that the Applicants' sole request was for the waiver of pre-deposit of interest. Referring to Section 75 of the Finance Act, 1994, it highlighted that interest is levied when Service Tax, collected from customers, is not credited to the Central Government within the prescribed period. Since the Applicants paid the Service Tax late, the Tribunal found no grounds to grant interest waiver, especially when the liability and collection of Service Tax were not disputed.

3. Section 35F of the Central Excise Act was cited, emphasizing the requirement to deposit duty demanded or penalty levied pending an appeal. The provision allows for dispensing with the deposit in cases of undue hardship, subject to conditions. In this case, the Tribunal found no justification to recall its earlier Order dated 22-9-09, dismissing the Applicants' Application for interest waiver. However, it granted a two-week extension for compliance with the Stay Order condition, emphasizing the importance of timely reporting.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, KOLKATA provides a comprehensive understanding of the issues raised, the arguments presented by both parties, and the legal interpretation applied by the Tribunal in reaching its decision regarding the waiver of pre-deposit of interest on Service Tax.