Further interest on excess service tax payment was unsustainable where tax liability under the transport exemption had already been exceeded.

Further interest was held unsustainable where service tax had been paid on the full transport charges despite an exemption limiting taxability to 25% of such charges, and the tax and interest legally due were already far below the amount remitted. The authorities also treated the matter as not fit for penalty, reinforcing that no additional monetary burden was warranted on the facts. The demand for further interest was therefore set aside in favour of the appellant.

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Issues: Whether the demand of further interest was sustainable when the appellant had paid service tax on the full transport charges instead of only the taxable portion covered by the exemption notification, and the amount due along with interest had already been substantially exceeded.

Analysis: The transport service was subject to an exemption notification restricting tax to 25% of the transport charges, subject to specified conditions. The appellant had paid tax on the entire amount without proper guidance, resulting in payment far in excess of what was legally due. On the facts, the tax payable and the consequential interest were much lower than the amount already remitted. The authorities had also treated the matter as one not fit for penalty, which supported the view that no further monetary burden was justified.

Conclusion: The demand of further interest was not justified and was set aside in favour of the appellant.

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