Interest on delayed service tax remains payable even during a stay of statutory operation absent specific exclusion.

Interest remained payable on delayed service tax even during the period when the High Court had stayed the operation of Chapter V of the Finance Act, 1994, including Sections 66 and 67. The Tribunal held that a stay of the statutory provisions does not, by itself, exclude that period from the computation of delay unless there is a specific judicial direction to that effect. It also rejected any distinction between a stay of recovery and a stay of operation of the statute, applying the principle that interest attaches to tax due for the full period of default. The assessee's liability for the stay period was upheld.

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Issues: Whether interest was payable on delayed payment of service tax for the period during which the operation of Chapter V of the Finance Act, 1994, including Sections 66 and 67, remained stayed by the High Court.

Analysis: The Tribunal treated the stay of the operation of the statutory provisions as not excluding the period from the computation of delay in the absence of any specific judicial direction excluding that period. It followed the principle that interest liability attaches to the tax due for the entire period of default, and relied on the applicable apex court and prior Tribunal ruling to reject the distinction sought to be drawn between a stay of recovery and a stay of the operation of the statute.

Conclusion: Interest was payable on the service tax dues for the period covered by the High Court's interim stay, and the assessee's liability for that period was upheld.

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