Delayed service tax payment attracts interest, but penalty fails without wilful suppression or intent to evade tax.

Delayed payment of admitted service tax under a voluntary compliance scheme attracted statutory interest because the liability remained unpaid beyond the due date, and rejection of scheme benefit did not remove that consequence. Penalty could not be sustained, however, because the record did not show wilful suppression, misstatement, or intent to evade tax; departmental knowledge and uncertainty over taxability weighed against penal action. The order was therefore upheld only for interest on the late payment, while the tax demand and penalty were set aside in part, resulting in a partial allowance of the appeal.

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Issues: (i) Whether interest was payable on the service tax amount of Rs. 4,50,756/- that had been deposited belatedly under the voluntary compliance scheme. (ii) Whether penalty could be imposed in the absence of wilful suppression or misrepresentation.

Issue (i): Whether interest was payable on the service tax amount of Rs. 4,50,756/- that had been deposited belatedly under the voluntary compliance scheme.

Analysis: The tax liability for the relevant period had already been deposited, but only on 30.12.2013, after the due date. Once the amount remained unpaid for the period from October 2008 to March 2010, the delayed discharge attracted statutory interest. Rejection of the scheme benefit removed immunity from such statutory consequences, even though the tax amount itself had already been deposited.

Conclusion: Interest was payable and the demand of interest was upheld in favour of Revenue.

Issue (ii): Whether penalty could be imposed in the absence of wilful suppression or misrepresentation.

Analysis: The record showed departmental knowledge of the non-payment and also reflected confusion regarding taxability of renting of immovable property services during the relevant period. The amount had been deposited voluntarily under the scheme, and the facts did not establish any deliberate suppression, wilful misstatement, or intent to evade tax. In the absence of those ingredients, the penal provision could not be invoked.

Conclusion: Penalty was not sustainable and was set aside in favour of Assessee.

Final Conclusion: The order was sustained only to the extent of interest on the delayed payment of service tax, while the tax demand and penalty were set aside, resulting in a partial allowance of the appeal.

Ratio Decidendi: Delayed payment of admitted tax liability attracts statutory interest, but penalty cannot be sustained without proof of wilful suppression or misrepresentation with intent to evade tax.

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