Appeal rejected on interest for late Service Tax payment. Tribunal upholds interest liability.

The appeal was rejected, upholding the liability to pay interest on delayed payment of Service Tax. The Tribunal confirmed that interest is payable for delayed payment despite the Service Tax being paid before the notice, citing relevant rules and a Supreme Court case precedent. The appellant's argument regarding unutilized CENVAT credit and the lack of a tax demand in the show cause notice were dismissed. The Tribunal emphasized that interest serves to compensate the Revenue for losses due to delayed payment, affirming the validity of the show cause notice demanding interest.

---

---

Issues:
Liability to pay interest on delayed payment of Service Tax.

Analysis:
The appeal was filed against the order passed by the Commissioner regarding the liability to pay interest on delayed payment of Service Tax. The appellant had given space in their malls to retailors/persons who entered into Minimum Guarantee agreements, paying a fixed percentage of sales or a Minimum Guarantee Money (MGM). The appellant paid Service Tax under "Business Auxiliary Service" for MGM but not for the additional income received from those who achieved target sales. After an audit, the Appellant paid the Service Tax amount but without interest and penalty. A show cause cum demand notice was issued for recovery of interest and imposition of penalties.

The adjudicating authority confirmed the interest demand and imposed a penalty. On appeal, the interest liability was reduced, and the penalty was dropped. The appellant challenged the interest liability only, not the Service Tax liability already paid. The appellant argued that no demand was raised for the tax amount in the show cause notice, and interest cannot be demanded without a tax demand. The revenue contended that interest is payable for delayed payment despite the Service Tax being paid before the notice.

The Tribunal referred to relevant rules stating that delayed payment of Service Tax attracts interest. The appellant's argument that no interest should be imposed due to unutilized CENVAT credit was rejected. The Tribunal cited a Supreme Court case emphasizing that interest is payable if duty is admitted but not paid on time, compensating the Revenue for the loss due to delayed payment. Therefore, the show cause notice demanding interest was deemed valid within the legal framework.

In conclusion, the appeal was rejected, upholding the liability to pay interest on delayed payment of Service Tax.

---