2024 (4) TMI 1012 - AT - Service Tax

Interest liability on delayed payment of tax - seeking waiver of interest since the payment of service tax was paid under the amnesty scheme - appellants have incurred expenditure towards the Import of Services such as CMMI Course Development Fee/CMMI Certified Lead appraiser per appraisal fee/CMI Institute per appraisal fee etc from CMMI Institute, USA for the services received from them - Reverse Charge Mechanism - Rejection of refund - HELD THAT - The appellants have paid the Service Tax allegedly on being informed about the clarification issued by CBIC. So called clarification, appears but an Amnesty Scheme notified for the benefit of defaulters proposing to give immunity to those who pay Service Tax evaded along with interest. Having accepted the liability, the appellants had no choice but to pay the applicable interest. Though the appellants could have argued that when Learned Commissioner (appeals) has dropped the penalty on the grounds that there was no suppression, fraud etc, the demand could not have been confirmed invoking extended period. They are not disputing the demand of service tax. Hence, their argument that interest is not payable does not hold water. Therefore, the appellants have lost the opportunity and there is no way that they could accept the Service Tax liability but not the interest applicable thereof. The Courts and Tribunal have been consistently holding that, under Excise, Service Tax provisions, payment of interest is a corollary to the payment of tax and the liability is automatic. The appellants having paid service Tax and having not disputed the payment of the same, whether or not under the said Amnesty Scheme, cannot seek exemption from payment of interest. To this extent, the stand of the appellants is not acceptable. The appellants are liable to pay interest on Service Tax paid in a delayed manner. Rejection of refund - HELD THAT - The appellants have paid the service tax after being pointed out by the audit - Having paid service tax and having not challenged such payment, the appellant has accepted the contention of the department. Moreover, the appellants have paid the applicable service tax on being communicated the contents of the circular issued by CBIC; as discussed above, the clarification is a sort of amnesty scheme wherein the tax defaulters were given immunity from payment of penalty in case the duty has been paid along with interest. Therefore, the admissibility of credit in such situation is subject to provision of Rule 9(1) (bb) and therefore, no argument at length, on the issue of provisions of Section 142(7) of CGST Act, 2017, are applicable to the appellant. Appeal dismissed.

Summary

Issues Involved:
The issues involved in the judgment are:
1. Liability to pay Service Tax under Reverse Charge Mechanism and imposition of penalty.
2. Claim for refund of Service Tax paid under Section 142(7)(b) of CGST Act, 2017.

Issue 1: Liability to pay Service Tax under Reverse Charge Mechanism and imposition of penalty:

The appellants, engaged in providing various taxable services, incurred expenditure towards Import of Services without discharging Service Tax under Reverse Charge Mechanism. A show cause notice was issued demanding Service Tax for a specific period, imposing penalty. The Deputy Commissioner confirmed the proposals, including the penalty. On appeal, the Commissioner upheld the order setting aside the penalty. The appellant then filed an appeal, arguing that interest paid should waive the penalty, citing an Amnesty Scheme. However, the Tribunal held that interest is automatic with the payment of tax, rejecting the appellant's argument that interest is not payable due to delayed notification. The Tribunal emphasized that payment of interest is a corollary to the payment of tax, and the liability is automatic, thus upholding the liability to pay interest on the Service Tax.

Issue 2: Claim for refund of Service Tax paid under Section 142(7)(b) of CGST Act, 2017:

The appellants requested a refund of Service Tax paid, contending that it should be refunded under Section 142(7)(b) of CGST Act, 2017. The Deputy Commissioner rejected the refund claim, citing provisions related to CENVAT credit admissibility. The appellants argued that they were eligible for refund and relied on various cases to support their claim. However, the Tribunal found that the appellants had not challenged the payment of Service Tax and had accepted the department's contention. The Tribunal also noted that the clarification issued by CBIC was akin to an Amnesty Scheme, granting immunity from penalty if the tax was paid with interest. Therefore, the Tribunal held that the admissibility of credit is subject to specific provisions, rejecting the appeals and upholding the department's decision to reject the refund claim.

(Order pronounced in the open court on 16.04.2024)