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2018 (7) TMI 1598 - AT - Service TaxDemand of Interest u/s 75 of the Finance act 1994 - imposition of penalties - delayed payment of service tax - relevant date for determination of the rate of taxation - What is the nature of interest under a Fiscal Statue which arises on the account of delayed payment of tax? - Held that:- The interest is compensatory in nature and is required to be paid by the tax payer in case of any default in payment of tax for the period of default - In a Fiscal statue the interest is levied as statutory liability and arises on account of delayed payment of taxes. Whether a separate notice demanding interest is required in case of delayed payment? Or the interest becomes statutorily payable on determination of the tax dues? - Held that:- No separate notice is necessary for the purpose of recovery of interest and same has to be recovered along with the tax as arrears of tax. If a notice is required to be issued demanding interest then in that case what will be the relevant date for computing the limitation for issue of such a notice? - Held that:- The demand for interest cannot be quantified till the arrears of tax are paid and it is consequently not possible to specify a definite figure in the recovery certificate. However in case of nonpayment of the interest along with the tax arrears if a notice demanding such interest is to be issued the same should be issued within reasonable time from the date of payment of tax arrears. There can be no dispute that interest on the service tax short paid and paid subsequently either on own volition or on being pointed out by the department, is required to be paid and if not paid suitable action for the recovery of the interest needs to be initiated against the defaulting entity - thus, the demand of interest upheld. Penalty - Held that:- 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 - Since Appellant was paying the taxes on reverse charge basis in respect of Information Technology Software Services, the delay in seeking registration for the same can be condoned without any penal consequences in term of Section 80 of the Finance Act, 1994. Demand of Interest upheld - penalties set aside - appeal allowed in part.
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