2020 (10) TMI 958 - HC - Central Excise

Demand of Interest over differential duty or unpaid service tax - Direction to deposit the arrears of interest on the enhanced rate of washed coking coal dispatched to the Steel Authority of India Limited (SAIL) in terms of long terms agreement between the SAIL and this petitioner Bharat Coking Coal Limited (BCCL) for the period from April 2011 to March, 2012 - Section 87 of the Finance Act, 1994 - HELD THAT - By virtue of this judgment in the case of M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR 2019 (5) TMI 657 - SUPREME COURT the issue now stands settled that the assessee is liable to pay interest upon the differential duty and / or the unpaid service tax detected by the Revenue. Petition dismissed.

Summary

Issues:
Challenge to notice for deposit of arrears of interest on coal supplied to SAIL with retrospective effect.

Analysis:
The petitioner sought to quash notices issued under Section 87 of the Finance Act, 1994, directing compliance with provisions for depositing arrears of interest on washed coking coal supplied to SAIL. The petitioner contended that the notices were illegal, arbitrary, and lacked jurisdiction as they were related to the enhanced rate of coal dispatched to SAIL retrospectively. The petitioner highlighted that no prior demand notice for duty payment was issued, questioning the validity of interest payment demand without such notice. Reference was made to a Supreme Court decision in the SAIL vs. CCE case, which was referred to a larger bench.

The respondent, Central Excise and Service Tax Department, argued that the liability to pay interest arises when the assesse admits to differential duty or unpaid service tax detected during revenue audits. The respondent relied on Section 11AA of the Central Excise Act, 1944, as amended by the Finance Act, 2011, which mandates interest payment from the due date till actual payment.

Counsel for the respondent cited a larger Bench decision of the Supreme Court in the case of Steel Authority of India Limited vs. Commissioner of Central Excise, Raipur, which established the liability of the assesse to pay interest on differential duty or unpaid service tax detected by the revenue. The petitioner did not contest this legal position established by the Supreme Court.

Considering the settled legal position on interest payment under Section 11AA of the Act of 1944, as confirmed by the Supreme Court in the Steel Authority of India Limited case, the challenge to the impugned notices was deemed to lack merit. The court referred to specific paragraphs of the Supreme Court judgment to support its decision. Ultimately, the writ petition was dismissed based on the prevailing legal interpretation and the established liability of the assesse to pay interest on differential duty or unpaid service tax as per the relevant provisions.