Interest on ST Payment - After CESTAT Appeal Order

[Arunachalam M]

Dear Experts,

Our Firm had contested the appeal in CESTAT against the order of the Commissioner (Appeals) and the Order was pronounced in favour of assessee and set aside the penalty and directed to pay some demand, for this appeal we have made pre-deposit and Bank Guarantee for the disputed tax payment.

My Query is Whether we have to pay Interest from the due date upto the date of Orders passed, or till the date of pre-deposit made, why because the demand amount is not beyond the value of pre-deposit already made.

For clear picture the following is the relevant date:

Due Date of ST Payment: 05.03.2009

Pre Deposit Made : 08/2015 & 07/2017

Order Passed by CESTAT: 06/2018

No. of Days Delay upto pre Deposit: Around 2300 Days

No. of Days Delay upto CESTAT Order: Around 3400 Days

I request the experts to kindly clarify the same.

Thanks in Advance.

[KASTURI SETHI]

You will have to pay interest from 5.3.2009 to the dates of pre-deposit. No doubt pre-deposit is an amount but it represents duty/Service Tax. Pre-deposit is part of duty/Service Tax. In 2014, CESTAT allowed pre-deposit through Cenvat Account. There was a circular to this effect. I mean to say no interest is required to be paid from the date of pre-deposit to the date of CESTAT Order.

[DR.MARIAPPAN GOVINDARAJAN]

Interest is payable from the due date to the date of pre deposit for the purpose of appeal.

[Arunachalam M]

Dear Experts,

I thank Mr. Kasturi Sethi & Dr. Mariappan Govindarajan for the reply and Clarification with regard to Interest Payment Calculation.

I request Kasturi Sir, to kindly let me the details of the Circular to this effect. So that I can conclude the same with my higher officials regarding this. And expecting a favourable reply in this regard.

Thanks in Advance.

[KASTURI SETHI]

This circular of CESTAT New Delhi was issued in the year 2014. It has to be traced out. It will take time. I have relied upon this circular in one of my client's case. Shall reverse as soon as possible.

[KASTURI SETHI]

CESTAT - Mandatory pre-deposit for filing Appeal after 6-8-2014 can be paid from Cenvat account or adjusted against deposit made during investigation

Circular F. No. 15/CESTAT/General/2013-14, dated 28-8-2014

[Arunachalam M]

Dear Mr. Kasturi Sethi Sir,

Thanks for the needy & timely help by providing the Circular at right time. I am very much grateful to you and thank a lot for sharing.

Your post encourages us to learn a lot. Thanks once again.

Regards,

M. Arunachalam

AI Summary

Interest on delayed tax payments payable until the pre-deposit date; pre-deposit treated as duty so interest ceases. Interest on delayed service tax is payable from the due date until the date of pre-deposit; pre-deposit is part of the duty and stops interest accrual thereafter. Administrative guidance from 2014 allows mandatory pre-deposits to be paid from the cenvat account or adjusted against prior deposits.