Tribunal rules in favor of appellant, setting aside interest demand on service tax period.

The Tribunal set aside the demand for interest on service tax for the period from 01.06.2008 to 30.09.2011, ruling in favor of the appellant. The appellant's compliance with payment in instalments, legal uncertainty surrounding taxability of renting immovable property, lack of evidence on intimation by Revenue, and the application of the period of limitation for interest were crucial factors in the decision. The Tribunal dismissed the Revenue's arguments on the extended period for interest demand and time-bar for issuing the show cause notice, ultimately allowing the appeal with consequential relief.

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Issues involved:
1. Demand of interest on service tax for the period from 01.06.2008 to 30.09.2011.
2. Legal uncertainty about the taxability of renting of immovable property during the relevant period.
3. Payment of service tax in instalments and compliance with Hon'ble Supreme Court's order.
4. Applicability of extended period for demand of interest.
5. Time bar for issuing the show cause notice.

Issue 1: Demand of interest on service tax for the period from 01.06.2008 to 30.09.2011:
The case involved the appellant, a service tax registrant, who gave its building on lease and was later issued a show cause notice for demanding interest on service tax. The original authority confirmed the demand, which was also upheld by the Ld. Commissioner (Appeals). The appellant contended that no service tax was paid due to legal uncertainty regarding the taxability of renting of immovable property during the relevant period. The appellant argued that they paid the service tax due in instalments, relying on the decision of Hon'ble High Court of Delhi and Hon'ble High Court of Bombay regarding retrospective amendments. The Tribunal noted the payment made by the appellant and the lack of evidence regarding the issuance of an intimation by the Revenue, ultimately setting aside the impugned order and allowing the appeal.

Issue 2: Legal uncertainty about the taxability of renting of immovable property during the relevant period:
The appellant argued that they did not pay service tax due to the uncertainty surrounding the taxability of renting of immovable property during the relevant period. They cited decisions of the Hon'ble High Court of Delhi and Hon'ble High Court of Bombay, along with the retrospective amendment made by the Finance Act, 2010. The appellant maintained that they operated under a bonafide belief based on legal precedents, and thus, the demand for interest was not sustainable. The Tribunal considered the appellant's submissions and the legal developments, ultimately ruling in favor of the appellant.

Issue 3: Payment of service tax in instalments and compliance with Hon'ble Supreme Court's order:
The appellant paid the entire demand of service tax in instalments, as evidenced by the payment details provided in the case. The Revenue contended that the appellant did not comply with the timeline set by the Hon'ble Supreme Court for payment. However, the Tribunal found that the Revenue failed to communicate the interest payable to the appellant before issuing the show cause notice, leading to the dismissal of the Revenue's argument.

Issue 4: Applicability of extended period for demand of interest:
The Revenue argued that the extended period for demanding interest applied in this case due to the delayed payment by the appellant. However, the Tribunal noted that the appellant had paid the entire service tax liability and highlighted the principle that the period of limitation for the principal amount should also apply to the claim for interest. The Tribunal found no merit in the Revenue's argument and dismissed it accordingly.

Issue 5: Time bar for issuing the show cause notice:
The appellant contended that the show cause notice issued on 24.08.2016 was time-barred, and the extended period could not be invoked. The Tribunal considered the appellant's explanation regarding the payment of service tax and referenced a Supreme Court case to support the application of the period of limitation to the demand of interest. The Tribunal concluded that there was no justification for confirming the interest amount, thereby ruling in favor of the appellant.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal filed by the appellant with consequential relief, if any.

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