2009 (6) TMI 52 - AT - Service Tax

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

Commissioner of Central Excise, Chennai Versus M/s. RK. Swamy BBDO Advertising (P) Ltd.

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 ... Stay of provisions of service tax by the High Court – Demand of Interest - Advertising Agency - assessee is a service provider under the category of ‘Advertising Agencies’ and registered with the department for payment of service tax. ST-3 returns were assessed vide assessment memorandum order dated 9.3.2002, wherein interest of Rs.18,29,894/- was demanded on the ground that there is a delay in payment of service tax. This delay was due to stay granted by the Hon’ble Madras High Court of operation of the provisions of Chapter V of the Finance Act, 1994 and in particular Sections 66 and 67 (d) of the Finance Act vide its order dated 3.2.99 – Held that - interest is payable by the assessee on tax payment due for the period during which the operation of the provisions of statute was stayed by the interim order dated 3.2.99 of the High Court 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.