2009 (6) TMI 52 - AT - Service Tax

Appellate decision reduces service provider's interest liability on tax during stay period.

The Appellate CESTAT, Chennai, held that interest is payable by a service provider on tax due during a period when tax provisions were stayed by the High ... Interest payable despite interim stay of operation of statute - computation of delay for interest purposes during interim stay - precedential effect of Calcutta Jute Manufacturing Co. on interest during stay - distinction between stay of recovery and stay of operation of statutory provisionsInterest payable despite interim stay of operation of statute - computation of delay for interest purposes during interim stay - distinction between stay of recovery and stay of operation of statutory provisions - Whether interest is payable on tax due for the period during which the operation of the provisions of the statute was stayed by an interim order of the High Court. - HELD THAT: - The Tribunal applied the ratio of Calcutta Jute Manufacturing Co. and its own earlier decision reported as 2006 (3) STR 671 (SC) to conclude that interest is payable on the tax due for the entire period of delay, including the period when the High Court had stayed the operation of the statutory provisions by its interim order dated 3.2.99. The respondents' attempt to rely on Adoni Ginning Factory as distinguishing authority was rejected: Adoni was factually different because there the public authority had not demanded surcharge for the period of the High Court stay and the Supreme Court had not stayed the operation of the Government order in question. The Tribunal therefore held that a High Court stay of operation of statutory provisions does not, without a specific order excluding the period from computation, relieve the assessee from liability to pay interest for that period.Interest is payable on the tax due for the period during which the operation of the statutory provisions was stayed by the High Court; the impugned order is set aside and the appeal is allowed.Final Conclusion: The Revenue's appeal is allowed; the Tribunal holds that interest is payable on the tax due for the period covered by the High Court's interim stay of the operation of the statutory provisions, and the impugned order is set aside. The Appellate CESTAT, Chennai, in the case of Ms. Jyoti Balasundaram and Mr. P. Karthikeyan, held that interest is payable by a service provider on tax due for the period during which the operation of the tax provisions was stayed by a high court. The decision was based on the Supreme Court's judgment in Calcutta Jute Manufacturing Co. vs. Commercial Tax Officer and the Tribunal's order in the appellant's own case. The interest liability was reduced from Rs. 18,29,894 to Rs. 10,41,806 by the Commissioner (Appeals), and the CESTAT set aside the remaining interest liability of Rs. 7,88,088 during the period covered by the stay order. The appeal by the Revenue was allowed, and the impugned order was set aside. The judgment was dictated and pronounced in open court.