2014 (8) TMI 304 - AT - Service Tax

Levy of Interest - Delay in payment of duty from CENVAT Credit account - It was contended that there were sufficient balance in the Cenvat account of the applicant, therefore, no interest is demandable in the present proceedings - Bar of limitation - Held that - So far as applicability of limitations of one year is concerned, the judgment passed by Delhi High Court will have relevance and it, prima facie, conveys that the demand of interest has also to be issued within one year. However, it is seen from the Annexure to the show cause notice dt. 18.04.2013 that the demand period is from October 2007 to March 2012 and the periodical duty paying returns in service tax matter are also required to be filed on half yearly basis. In view of the demand previsions the entire period is not beyond one year. Appellant has not made out a prima facie case for complete waiver of the confirmed demands as on merits once there is a delay in payment of duties the interest is required to be paid on the period of delay - stay granted partly.

Summary

Issues: Stay application for staying the operation of OIO No.SUR-EXCUS-002-COM-061-13-14; Delay in payment of periodical duty from Cenvat Credit; Applicability of time limit for demand of interest; Prima facie case for complete waiver of confirmed demands; Requirement of pre-deposit amount for stay on recovery.

In this case, the appellant filed a stay application to suspend the operation of OIO No.SUR-EXCUS-002-COM-061-13-14 passed by the Commissioner of Customs, Central Excise, and Service Tax, Surat-II. The appellant, represented by Shri D.K. Trivedi, argued that there was a delay in paying the periodical duty from the Cenvat Credit, which was later paid between July 2010 to March 2012. He contended that there was a sufficient balance in the Cenvat account, thus no interest should be demanded. Additionally, he cited a Delhi High Court judgment regarding the time limit for issuing a demand notice, asserting that the demand in this case was time-barred.

On the other hand, Shri K.J. Kinariwala, representing the revenue, argued that there is no time limit for demanding interest and supported the adjudicating authority's decision. He pointed out that the demand period in question was from October 2007 to March 2012, and returns were required to be filed on a half-yearly basis, indicating that the entire period was within one year.

After hearing both parties and examining the case records, the judge, H K Thakur, noted that the Delhi High Court judgment suggested that the demand for interest should also be issued within one year. However, considering the details in the show cause notice and the periodic duty paying returns required on a half-yearly basis, the entire period of demand did not exceed one year. As there was a delay in duty payment, the appellant was directed to pre-deposit an amount of Rs. 50,000 within four weeks and report compliance by a specified date. Upon payment of the pre-deposit amount, a stay on recovery of the remaining amounts was granted until the appeal's disposal.

This judgment highlights the importance of timely duty payments, the applicability of time limits for interest demands, and the requirement for pre-deposit amounts for seeking a stay on recovery in such cases.