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2023 (8) TMI 901 - AT - Service TaxChargeability of Interest - provisions made in the books of account of the appellant towards the payment of Royalty and Technical Knowhow fees - HELD THAT - The facts, as appearing from the Statement-of-Facts and the orders of the lower authorities, indicate that the appellant had short-paid the tax even though the same was apparently on the provision made. Whether the provision made by the appellant on the payments of Royalty and Technical Knowhow is amenable to Service Tax has not been questioned nor it is found that any arguments advanced in this regard. When the assessee, without questioning the taxability, has paid part of the tax, it is incumbent for the assessee to remit the balance tax portion upon being pointed out, with interest in terms of Section 75. Thus, when there is a delay of the payment, then the same has to be remedied with the payment of interest on such belated payments in terms of Section 75 of the Finance Act, 1994. The appellant, admittedly, has not challenged the levy of tax, but only questioned the interest which does not merit consideration - It is found that interest under Section 75 is necessarily linked to the duty payable, such liability arises automatically by operation of law, as held by the Hon ble Apex Court in the case of Commissioner of Central Excise, Pune v. M/s. SKF India Ltd. 2009 (7) TMI 6 - SUPREME COURT , which is also applicable to belated payment of interest even under the Service Tax Act. There are no merit in the appellant s case and therefore, the same is dismissed.
Issues:
The appeal against Order-in-Appeal No. 47/2013 dated 23.10.2013 passed by the Commissioner (Appeals), Central Excise and Service Tax, Large Taxpayer Unit, Chennai. Issue 1: The Department issued a Show Cause Notice proposing to demand Service Tax on amounts paid towards Royalty and Technical Knowhow to an 'Associated Enterprise'. The Show Cause Notice was confirmed in Order-in-Original No. LTUC/358/2011-ADC dated 28.10.2011. Issue 2: The appellant challenged the demand for Service Tax and interest, primarily disputing the chargeability of interest. The appellant cited previous cases where similar issues were decided in their favor, requesting waiver of the interest charged. Judgment: The Appellate Tribunal considered the contentions of both parties and relevant case laws. The Tribunal noted that the appellant had paid the tax as demanded but disputed the chargeability of interest only. The Tribunal referred to previous cases and observed that when the liability itself was questionable, the Revenue is not justified in demanding interest. Based on this observation, the appellant requested for waiver of the interest charged. The Tribunal found that the appellant had short-paid the tax but did not question the taxability of the provision made for Royalty and Technical Knowhow. The Tribunal held that interest under Section 75 is linked to the duty payable and arises automatically by operation of law. Therefore, the Tribunal dismissed the appellant's case, stating that when there is a delay in payment, interest must be paid on such belated payments in accordance with Section 75 of the Finance Act, 1994. The order was pronounced in the open court on 17.08.2023.
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