Delayed service tax interest computed for the actual period of delay, not as a full month for part-month default.

Interest on delayed service tax payment under Section 75 of the Finance Act, 1994 was held payable only for the actual period of delay, because the provision charges simple interest for every month or part of a month by which payment is delayed. The reasoning treated the section as requiring interest to be computed by the period of delay rather than by treating any part-month delay as a full month. A departmental circular was held inapplicable because it addressed the word "month" and not the operative phrase "part of a month". No further differential interest was recoverable.

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Issues: Whether, under Section 75 of the Finance Act, 1994, interest for delayed payment of service tax is payable only for the actual period of delay or for the entire month in which a part of the delay occurs.

Analysis: Section 75 provides for simple interest at the rate of one and one-half per cent for every month or part of a month by which crediting of tax is delayed. The provision was treated as analogous to Section 16(3) of the Andhra Pradesh General Sales Tax Act, 1957, under which interest is chargeable for the period of delay and not for a full month when the delay is only for part of a month. The circular relied upon by the department was held to be inapplicable because it addressed the expression "month" and not the relevant expression "part of a month".

Conclusion: Interest is payable only for the actual period of delay, and no further differential interest is recoverable from the assessee.

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