TaxTMI 
TaxTMI 
2018 (7) TMI 1598
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....ct of the services so received from overseas on reverse charge basis. They were also taking the credit of the service tax so paid on reverse charge basis. b. The rate of service tax in respect of ITSS, received by them was changed from 12% to 10% with effect from 24th February 2009. Accordingly for the services received by them during the month of February 2009, they paid service tax and applicable cess at reduced rate, as the bill for the services received by them during the month of April 2009, was raised by the provider of service only on 28th February 2009. c. On being pointed out by the Audit subsequently, they paid the differential amount of Service Tax due i.e. Rs. 74,92,646/- (Rupees Seventy Four Lakhs Ninety Two Thousand and Six Hundred Forty Six Only) vide echallan No 51948 dated 04.10.2012 and intimated to the department vide their letter dated 18.10.2012 on 19.10.2012. They also took the credit of the tax so paid on reverse charge basis. d. Sine they did not pay the interest amount due in terms of Section 75 of the Finance act 1994, a show cause notice dated 28/08/2013 was issued to the Appellant, demanding interest on the delayed payment of service tax and als....
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....TRU dated 12th March 2012 to argue that the changes brought by way of introduction of Point Of Taxation Rules were to bring uniformity in the system. (iv) He stated that since they have paid service tax under protest, therefore interest is not leviable. He argued that it has been their stand throughout that they were not required to pay differential tax, but have paid the same as they were entitled to the credit of the tax paid by them on reverse charge basis. (v) He submitted that the notice issued to them demanding the interest is barred by limitation as it has been issued much beyond the prescribed period from the February 2009. The show cause notice has sought to invoke extended period of limitation to demand interest and penalty. (vi) Since there is no suppression on their part, extended period cannot be invoked and also no penalty could have been imposed under Section 78 of the Finance Act, 1994. (vii) Since they were regularly discharging the service tax liability in respect of Information Technology Software Services, received by them from their overseas provider of service, the act of not obtaining registration in respect of the said service cannot be but a pro....
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....-ST dated 18.07.2011 and D O F No 334/1/2012-TRU dated 12th March 2012. In view of the authorities as referred above, the reliance placed on any para of the circular which may go contrary to the above decisions is totally misplaced in view of the Apex Court decision in case of Rattan Melting [2008 (231) ELT 22 (SC)], wherein constitutional bench of Apex Court has observed as follows: "6. Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutor....
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....ted from the date when the tax was short paid. Since there is no case for suppression, fraud etc., there is no justification for invoking the extended period of limitation in this case. He relied on the following authorities:- a. Hindalco Industries Ltd. Vs Commissioner Central Excise Allahabad [2003 (161) ELT 346 (T)]; b. Collector of Customs Madras Vs T V S Whirlpool Ltd. [1996 (86) ELT 144 (T)] affirmed by the Supreme Court in 2000 (119) ELT A177 (SC) c. Jain Irrigation Systems Ltd. Vs Commissioner Central Excise Nasihik [2015 (40) STR 752 (T)] d. Mahindra & Mahindra Vs Commissioner Central Excise Mumbai V [2017-VIL-435-CESTAT-MUM-CE]. 12 Section 75 of Finance Act 1994 provides as under: "75. Interest on delayed payment of service tax Every person, liable to pay the tax in accordance with the provisions of section 68 or rules made thereunder, who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest at such rate not below ten percent. and not exceeding thirty-six per cent. per annum, as is for the time being fixed by the Central Government, by notification in the Official ....
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....hall" and "be liable" clearly indicates that there is no option. As discussed earlier, this is a civil liability of the assessee, who has retained the amount of public exchequer with himself and which ought to have gone in the pockets of the Central Government much earlier. Upon reading Section 11AB together with Sections 11A and 11AA, we are of firm view that interest on the duty evaded is payable and the same is compulsory and even though the evasion of duty is not mala fide or intentional." 13. Hon'ble Supreme Court has in case of Commissioner of Trade Tax Vs Kanhai Ram 2005 (4) SCC 472 has held that in similar situation the liability to pay interest arises on account of operation of the statue and no separate demand in respect of such interest was required to be made. In the same decision court also observed that in case the demand of interest was to be made it was to be made within reasonable time from the date of assessment order creating the tax liability. The relevant paras of the said decision are reproduced below: "12. In the case of STO v. Dwarika Prasad Sheo Karan Dass 1977 1 SCC 22 this Court has held that the assessee is liable to pay interest under section 8(1-....
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....ecifically urged that the subsequent proceedings to the assessment are barred by limitation and that even though the order was passed on 6-6-1986 imposing tax liability, etc., the assessing authority had passed another order only on 30-7-1990 holding that on admitted amount of tax, the assessee was liable to pay interest at 24% p.a from 1-5-1978 and, therefore, on the question of delay in demanding interest, the demand has to be set aside. This argument of the learned counsel appearing for the respondent merits acceptance. In this case, the assessment relates to Assessment Year 1977-78. The respondent furnished his return to the assessing authority and the assessing authority passed an assessment order against the respondent and in accordance with the assessment order, the assessee has deposited the entire amount of tax amounting to Rs. 15,236.98 paise on 30-8-1986 and Rs. 2817 on 26-6-1982. However, on 30-7-1990, the assessing authority passed an order imposing interest against the respondent. Thus the demand was after nearly four years. There was no demand of interest in the assessment order which, in our opinion, forms part of the assessment order. As the assessment order did no....
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....ecovered as land revenue that sub-sec. (1-A) provided that the interest shall be added to the amount of tax and be deemed for all purposes to be a part of the tax. 7 According to Section 8 (1-A), simple interest at the rate of 18 per cent per annum shall run on the amount of arrears of sales tax from the date specified in that sub-section. It would thus appear that the liability to pay interest is automatic and arises by operation of law. The amount of interest on the date of payment of tax is not constant but increases from day to day. The amount of interest can, therefore, be not predicated till such time as the arrears of sales tax are paid and it is consequently not possible to specify a definite figure in respect of the interest in the recovery certificate. At the time the arrears of sales tax are paid, there can be no difficulty in finding the amount of interest which has become due. The amount of tax on which interest is to accrue, the rat, of interest, the date from which interest is to commence and the date up to which interest is to be counted are all known. It is, therefore, a matter of mere arithmetical calculation to arrive at the figure of interest. We find nothing....
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....he party. The case is pure of short payment of taxes due on the due on the due date. It is not the case of the department that appellant has suppressed the value of taxable service or has not declared the same to the department. Further entire amount of tax paid by the appellant on reverse charge was available to the Appellant as CENVAT credit there can be no question of intention to evade payment of tax. Thus they had contested that since the issue in dispute was not free from doubt their act of short payment of tax cannot be termed as an act of deliberate suppression, misstatement, fraud etc with intent to evade payment of tax and there by liable to penalty under section 78. The case of department is that Appellant has received the said services continuously during the entire period (February 2009), but while paying the taxes in respect of these services received not paid the tax at applicable rate for the part of month as during that month. The rate of tax had been reduced from 12% to 10% with effect from 24.02.2009, Appellant had paid the tax in respect of all the services received during the month of February 2009 paid the tax @ 10% which was applicable on the date when the ov....