2022 (12) TMI 465 - AT - Service Tax

Liability of interest - whether the liability of interest under Section 75 survives, once it has been held that there is no demand of service tax for the period 2014-15? - Works Contract Service - HELD THAT - Once it has been held that no service tax is payable for the financial year 2014-15, there can be no payment of interest under Section 75. Accordingly, this appeal is allowed and the impugned order is set aside.

Summary

Issues Involved:
1. Liability of interest under Section 75 when there is no demand of service tax for the period 2014-15.

Analysis:
The case involved the question of whether the liability of interest under Section 75 would persist if it has been determined that there is no demand for service tax for a specific period. The appellant, engaged in civil construction works, was initially held liable to pay interest for late or non-payment of service tax for the period April 2014 to September 2014. However, in a subsequent decision, it was established that for the financial year 2014-15, the appellant had rendered services that were exempt from tax. The appellant argued that since no service tax was payable for the said financial year, there should be no demand for interest under Section 75.

The learned Commissioner (Appeals) did not receive any appeal against the decision dated 21.09.2020, where it was concluded that no service tax was payable for the financial year 2014-15. Considering this, the Tribunal found that if it has been established that no service tax is due for a specific period, then there should be no obligation to pay interest under Section 75. Consequently, the Tribunal allowed the appeal and annulled the previous order holding the appellant liable for interest.

Additionally, the Tribunal noted a procedural issue where the Commissioner (Appeals) had been issuing separate orders for cross-appeals instead of consolidating and deciding them together. This practice led to conflicting decisions and increased litigation, prompting the Tribunal to recommend that the CBIC issue appropriate instructions to ensure that cross-appeals are heard and resolved jointly to prevent such discrepancies. The Tribunal directed the Registry to forward a copy of this order to the Chairman, CBIC for necessary action.

In conclusion, the Tribunal ruled in favor of the appellant, determining that no interest under Section 75 was payable due to the absence of a service tax liability for the financial year 2014-15. The judgment highlighted the importance of streamlining procedures to avoid conflicting orders and reduce unnecessary litigation in similar cases.