2017 (6) TMI 1027 - AT - Service Tax

Liability of interest - delayed payment of service tax - Held that - there is delay in payment of service tax of ₹ 1,18,59,571/- - adjudicating authority must reconsider the issue of non imposition of penalty and interest commensurate to the amount of service tax of ₹ 99,00,373/- - appeal allowed by way of remand.

Summary

Issues:
Appeal against Order-in-Original for non-imposition of penalty and interest on delayed service tax payment.

Analysis:
The appeal was filed by the Revenue against Order-in-Original No. 66/P-III/ST/COMMR/2011-12 dated 29-3-2012. The grievance of the Revenue was that interest and penalty were ordered only on the service tax paid in cash and not on the amount available as Cenvat credit with the respondent. The Revenue argued that regardless of the availability of credit, interest should be charged on the delayed payment of service tax. The Ld. Joint Commissioner(A.R.) cited relevant judgments to support this argument (Commissioner of Central Excise, Mumbai Vs. Mahindra & Mahindra Ltd [2005-TIOL-01-SC-LB] and Commissioner of C. Ex. Chandigarh Vs. Dharampal Prem Chand Ltd [2011 (265) ELT 81 (Tri. Del.)]).

Upon review, the Tribunal found that the Ld. Commissioner had not provided proper reasoning for not imposing penalty and interest on the demand of service tax amounting to &8377; 99,00,373. It was observed that there was a delay in the payment of service tax, and the adjudicating authority failed to justify the non-imposition of penalty and interest. The Tribunal concluded that the adjudicating authority must reconsider the issue and directed a fresh order specifically related to the interest and penalty concerning the demand of Service Tax amounting to &8377; 99,00,373. Therefore, the appeal was allowed, and the case was remanded back to the adjudicating authority for a fresh decision on the penalty and interest aspects.

This judgment highlights the importance of imposing penalty and interest on delayed service tax payments, irrespective of the availability of credit, to ensure compliance with tax regulations and discourage delays in payment. The Tribunal emphasized the need for proper justification and reasoning when deciding on penalty and interest related to tax demands, underscoring the significance of thorough analysis and appropriate application of legal principles in such cases.