2012 (10) TMI 406 - AT - Service Tax

Tribunal sets aside orders, rules interest not applicable on properly paid tax.

Hindustan Coca Cola Beverages (P.) Ltd. Versus Commissioner of Central Excise, Jaipur-I

Hindustan Coca Cola Beverages (P.) Ltd. Versus Commissioner of Central Excise, Jaipur-I - [2012] 36 STT 48 (NEWDELHI - CESTAT) (MAG) Issues:1. Applicability of Cenvat Credit scheme to services received from Goods Transport Agencies.2. Payment of service tax through Cenvat credit vs. cash.3. Demand for interest on tax initially paid through credit and later in cash.4. Penalty imposition under section 76 of the Finance Act, 1994.Analysis:Issue 1: Applicability of Cenvat Credit scheme to services received from Goods Transport AgenciesThe Appellants, manufacturers of excisable goods, availed the benefit of the Cenvat Credit scheme for services received from Goods Transport Agencies. The dispute arose regarding the payment of service tax on these services as per the provisions of Rule (2)(v) of the Service Tax Rules, 1994, for the period April 2005 to September 2005.Issue 2: Payment of service tax through Cenvat credit vs. cashInitially, the Appellants paid tax on the services received using Cenvat credit available in their account. However, during a Revenue audit, it was objected that the service tax should have been paid in cash rather than through Cenvat credit. The Appellants then paid the tax amount in cash but did not pay interest on the tax initially paid through credit and later in cash.Issue 3: Demand for interest on tax initially paid through credit and later in cashThe Revenue issued a Show Cause notice demanding the tax amount along with interest and penalty. The Commissioner (Appeal) confirmed the demand for interest but waived the penalty. The Appellants contended that the initial payment through Cenvat credit was a valid discharge of tax liability, citing a relevant court decision. The Tribunal found merit in this argument, stating that interest is payable only when tax is not paid on time, and since the tax was paid properly during the relevant period, there was no liability for interest.Issue 4: Penalty imposition under section 76 of the Finance Act, 1994Although the penalty was waived by the Commissioner (Appeal), it was an issue raised in the case. The Tribunal did not delve into this aspect as the focus was primarily on the demand for interest and the validity of the tax payment made through Cenvat credit.In conclusion, the Tribunal set aside the orders of the lower authorities, allowing the appeal based on the argument that the tax was paid properly during the relevant time, and hence, there was no liability for interest.