2012 (9) TMI 336

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....pellants in the year 2007 and payment was made in August 2008. However, the appellant did not pay service tax which they were to pay as a recipient of services since the service provider did not have their office in India. When this was pointed out, appellant paid the service tax amount of Rs. 1,54,394/- on 15-12-2008. However, they did not pay the interest amount which was required to be paid. Proceedings were initiated and show cause notice was issued on 27-8-2009 which culminated into confirmation of demand for service tax with interest and appropriation of the amount already paid by them and imposition of penalty under sections 76, 77 and 78 of the Finance Act, 1994. 2. Learned consultant on behalf of the appellant submitted tha....

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....after issue of show cause notice. For ready reference the provisions of Section 73(3) are reproduced :- "Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise' officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the Central Excise officer of such payment in writing, who on receipt of such information shall not serve any notice under sub-section ....

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....t, the Central Excise Officers should have determined the amount of short payment of service tax (which happens to be an interest element in this case), and should have proceeded to recover the amount in the manner specified in this Section and the period of one year counts from the date of intimation. This means that if interest was not paid, the main section comes into play once again. Therefore, after receiving the intimation on 19-12-2008 the Central Excise officers should have determined the interest payable and communicated to the assessee and if the assessee did not pay the same, they had one year period for issue of show cause notice. In this case, without intimating to the assessee that he is liable to pay interest and they should ....