Interest on delayed service tax payment is not waivable, while penalty relief was left undisturbed.

Penalty set aside by the Commissioner (Appeals) was not disturbed because prior Tribunal decisions supported that view and no reason was found to interfere. Interest on delayed service tax payment could not be waived, as section 73(3) of the Finance Act, 1994 was treated as requiring payment of tax and interest after the lapse is pointed out, with no provision authorising waiver. The order was therefore sustained on penalty, while the assessee was directed to pay interest on the delayed service tax payment.

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Issues: (i) Whether the penalty set aside by the Commissioner (Appeals) required interference; (ii) Whether interest on delayed payment of service tax could be waived.

Issue (i): Whether the penalty set aside by the Commissioner (Appeals) required interference.

Analysis: The appellate authority had set aside the penalty relying on prior Tribunal decisions. No reason was found to disturb that conclusion.

Conclusion: The penalty set aside by the Commissioner (Appeals) was not interfered with and the assessee succeeded on this issue.

Issue (ii): Whether interest on delayed payment of service tax could be waived.

Analysis: Section 73(3) of the Finance Act, 1994 was treated as contemplating payment of tax and interest after the lapse is pointed out, and the absence of any provision for waiver of interest led to the conclusion that interest could not be waived for delayed payment.

Conclusion: The respondent was held liable to discharge the interest in accordance with law and the Revenue succeeded on this issue.

Final Conclusion: The order was sustained insofar as penalty was concerned, but the assessee was directed to pay interest on the delayed service tax payment.

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