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2020 (2) TMI 226 - AT - Service TaxRecovery of interest u/s 87 without issuance of SCN - Delay in payment of service tax - HELD THAT:- In the present case the appellant paid the service tax liability but with delay. Appellants have shown the tax arrears in their returns and subsequently paid the tax due. Subsequently, during the audit, the Department detected that there was a delay and the appellant is liable to pay the interest for the delay in payment of the tax. The original authority has given the decision in violation of the principles of natural justice and no opportunity whatsoever is given to the appellant to put forth his defense regarding the basis of calculation on which the interest payable is arrived. Further the provisions of Section 73(1B) which was inserted w.e.f. 14/05/2015 is not applicable in the present situation because Section 73(1B) covers situation where self-assessed tax is not paid in part or in full, recovery of such tax with interest can be made by invoking the provisions of Section 87 of the Finance Act, 1994 whereas in the present case there is no dispute regarding the payment of tax and the said payment of tax was paid much before the audit was conducted and there is no demand of tax in the present case. Hence, provisions of Section 73(1B) read with Section 87 are not applicable in the present case. Applicability of time limitation for demanding of interest - HELD THAT:- In the present case, the demand is made for the period April 2011 to March 2016 by issue of a letter of demand dated 24/08/2017. The Tribunal has dealt with this issue of limitation in various decisions relied upon by the appellant cited supra and it has been consistently held that to demand interest also period of limitation is applicable - in the Master Circular No. 1053/02/2017-CX dated 10/03/2017, the Board has clarified that in case where duty and interest is demanded, it is quite clear that limitation prescribed in Section 11A applies. Further it may be noted that in cases where duty has been paid belatedly and interest has not been paid, interest needs to be demanded and recovered following the due process of demand and adjudication. In such cases, the period of limitation as prescribed in Section 11A applies for demand of interest. The confirmation of demand of interest without issuing the show-cause notice is not sustainable - period of limitation is applicable as far as demand of interest is concerned - Appeal allowed - decided in favor of appellant.
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