2018 (3) TMI 270 - AT - Service Tax

Short payment of service tax - Renting of Immovable Property - Held that - The said service was under litigation before various High Courts and was ultimately decided by the Hon ble Delhi High Court in favor of the Revenue - Section 80 Finance Bill, 2012 is to the effect that if an assessee deposits the entire tax within the period of six months from the date of receipt of assent of the President to the Finance Bill, 2012, the penalties would not be imposable - In the present case the entire deposits were made in the year 2010 itself. As such, no penalty is required to be imposed upon him. Interest and penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Time bar on demand of interest.
2. Liability of interest on reversed credit amount.
3. Imposition of penalties for non-payment of service tax.

Analysis:

Issue 1: Time bar on demand of interest
The appellant, the owner of a Mall registered with the Service Tax Department, was found availing inadmissible Modvat Credit and not depositing service tax in cases where tenants did not pay. Proceedings were initiated against the appellant for confirmation of interest and reversal of credit, with penalties proposed. The Adjudicating Authority confirmed interest and penalties. However, the appellant cited the Hon'ble Delhi High Court decision in Hindustan Insecticides Ltd. Vs. Commissioner, stating that interest demand is barred by limitation when the notice is issued invoking the longer period. The Tribunal set aside the interest confirmation based on this.

Issue 2: Liability of interest on reversed credit amount
The appellant argued that no interest should be levied on the reversed credit amount as it remained unutilized in the Cenvat Account. Citing the Hon'ble Karnataka High Court decision in Commissioner Vs. Bill Forge Pvt. Ltd., it was held that interest liability does not arise if the wrong credit is not utilized. Consequently, the interest confirmation on the reversed credit amount was not upheld.

Issue 3: Imposition of penalties for non-payment of service tax
Regarding penalties, it was noted that the appellant did not deposit service tax when not received from service recipients, possibly due to a bonafide belief. The service tax in question, related to "Renting of Immovable Property," was under litigation and ultimately decided in favor of the Revenue by the Hon'ble Delhi High Court. Section 80 of the Finance Bill, 2012, stated that if the entire tax is deposited within six months from the date of the Finance Bill's assent, no penalties would be imposed. Since the appellant made all deposits in 2010, no penalty was deemed necessary. Consequently, the Tribunal set aside the interest confirmation and penalty imposition, allowing the appeals on that extent.

This judgment highlights the importance of adherence to time limits for interest demands, the non-liability of interest on unutilized credits, and the consideration of bonafide beliefs in penalty impositions related to service tax payments.