2008 (6) TMI 55 - AT - Service Tax

Tribunal upholds Revenue's appeal for interest under Finance Act, penalties set aside

The Tribunal allowed the Revenue's appeal, upholding the demand for interest under Section 73(3) of the Finance Act, 1994, after penalties and interest ... Penalty for service tax - interest on delayed payment of service tax - Section 73(3) of the Finance Act, 1994 - interest where service tax and interest are paid after lapses are pointed out - no statutory waiver of interestPenalty for service tax - Validity of the Commissioner (Appeals) setting aside the penalty imposed by the Original Authority. - HELD THAT: - The Tribunal noted that the Commissioner (Appeals) had relied upon earlier Tribunal decisions in setting aside the penalty. The Bench declined to interfere with the Commissioner (Appeals)'s order insofar as the penalty was set aside, indicating no reason to overturn the appellate authority's decision in this respect. [Paras 3]The Commissioner (Appeals)'s order setting aside the penalty is not interfered with.Interest on delayed payment of service tax - Section 73(3) of the Finance Act, 1994 - interest where service tax and interest are paid after lapses are pointed out - no statutory waiver of interest - Whether interest on delayed payment of service tax could be waived and whether the demand for interest should be sustained. - HELD THAT: - The Tribunal observed that Section 73(3) of the Finance Act, 1994 contemplates a situation where both service tax and interest become payable after lapses are pointed out, and that there is no provision permitting waiver of such interest. Having regard to this statutory framework and recent Bench decisions, the Tribunal held it would not be proper to waive interest in respect of delayed payment when no statutory basis for waiver exists. Consequently the respondent must discharge the interest liability in accordance with law. [Paras 3]Revenue's appeal is allowed insofar as the demand of interest is upheld and the respondent is directed to pay interest as per law.Final Conclusion: The penalty set aside by the Commissioner (Appeals) is left undisturbed, but the Tribunal allows the Revenue's appeal to the extent of restoring the demand for interest under the statutory scheme; the respondent must discharge the interest liability in accordance with law. The Revenue appealed against Order-in-Appeal No. 87/2007-CE dated 2-3-2007, where penalties and interest were set aside. The Tribunal upheld the demand for interest as per Section 73(3) of the Finance Act, 1994. The appeal was allowed in favor of the Revenue.