2019 (1) TMI 320 - AT - Service Tax

Interest on Delayed payment of service tax - payment of tax made before issuance of SCN - amendment in Section 80 of the Finance Act, 1944 - time limitation - Held that - Section 80 of the Finance Act, 1944 makes it clear that once the payment has been made before the issuance of Show Cause Notice no question of any penalty nor of interest at all arises - The payment in the present case was made after the said amendment but before the issuance of Show Cause Notice. No doubt the payment is for the period prior the said amendment but since the amendment is beneficial in nature, retrospect effect can be given to the said amendment. Therefore, no question of imposition of penalty at all arises. Time limitation - Held that - SCN is apparently beyond the normal period of one year. There is the apparent acknowledgment on the part of the Adjudicating Authority about the decision of Delhi High Court as has been impressed upon by the appellant. In the given circumstances, the non-payment was actually due to the said prevalent confusion. There is nothing on record which may be considered as an evidence qua positive act of the appellant of having an intention to evade the duty for the said period - SCN definitely barred by time. The Adjudicating Authority below are held to have committed an error while confirming the demand of interest, ignoring the legislative intent under Section 73 of the Act - appeal allowed - decided in favor of appellant.

Issues:
1. Delayed payment of service tax without interest.
2. Inclusion of disputed periods in the Show Cause Notice.
3. Confusion regarding service tax on renting of immovable property.
4. Applicability of Section 75 of the Finance Act.
5. Imposition of penalty and interest.
6. Bar on time limitation for Show Cause Notice.

Analysis:

1. The appeal was against an Order-in-Appeal regarding delayed payment of service tax without interest. The Department observed delayed payments from April 2008 to September 2012 during an audit. A Show Cause Notice was issued proposing interest payment of ?2,87,881. The Assistant Commissioner confirmed the proposal under Section 75 of the Finance Act. The Commissioner (Appeals) upheld the decision.

2. The appellant argued that service tax for certain periods was paid on time and disputed the inclusion of those periods in the Show Cause Notice. They mentioned confusion due to court decisions regarding the levy of service tax on renting of immovable property. The appellant contended that the Show Cause Notice was issued beyond the prescribed one-year period.

3. The Department justified the order, emphasizing the mandatory nature of interest payment under Section 75. They cited a High Court case to support that interest is compensatory and mandatory for delayed service tax payments.

4. The Tribunal observed that the appellant made timely payments for some periods and paid the full tax before the Show Cause Notice for the remaining period. An amendment in Section 80 of the Finance Act was noted, stating no penalty is imposable if service tax and interest are paid within a specified time. The Tribunal held that no penalty or interest could be imposed in this case.

5. The Tribunal found the Show Cause Notice beyond the normal one-year period and acknowledged the confusion due to court decisions. It concluded that there was no evidence of intentional evasion by the appellant, thus the Notice was time-barred. The Tribunal held that interest was not recoverable beyond the limitation period and that Section 75 was not applicable for the disputed period due to the court decision.

6. Consequently, the Tribunal set aside the order, stating that the Adjudicating Authority erred in confirming the interest demand. It emphasized the legislative intent under Section 73 of the Act and the incorrect demand of interest even for periods where the appellant had paid on time. The appeal was allowed.

This detailed analysis covers the issues of delayed payment of service tax, inclusion in the Show Cause Notice, confusion regarding service tax, applicability of relevant legal sections, and the imposition of penalty and interest, providing a comprehensive understanding of the judgment.

← Previous Next →