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No interest and/ or penalty can be levied just because the Assessee had paid Service tax which was actually not payable

Service Tax - By: - Bimal jain - Dated:- 15-4-2015 - Dear Professional Colleague, We are sharing with you an important judgment of Hon ble High Court, Madras, in the case of Commissioner of Central Excise, Tirunelveli Vs. Sundaram Textiles Ltd. [2014 (12) TMI 163 - MADRAS HIGH COURT] on the following issue: Issue: Whether interest and/or penalty can be levy just because the Assessee had paid Service tax, which was actually not payable? Facts and background: Sundaram Textiles Ltd. ( the Responden .....

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Act ) which was confirmed vide Order-in-Original dated April 25, 2005. Being aggrieved, the Respondent preferred an appeal before the Learned Commissioner (Appeals), wherein it was held that the amendment made in the Service Tax Rules providing for liability of service recipient under Reverse Charge mechanism came into effect only from August 16, 2002, hence, during relevant period, there was no liability to pay Service tax even though the Respondent was made to pay Service tax by the Department .....

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as upheld the Order of the Hon ble Tribunal and held that since amendment to the Service Tax Rules have come into effect on August 16, 2002 and it is only by way of amendment the liability of service recipient to pay Service tax on the Impugned Service arises otherwise there was no liability on the Respondent to pay Service tax during the period under dispute. Since the Respondent was not liable to pay Service tax, the Respondent is also not liable to pay Interest as well as penalty. Hope the in .....

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