TMI Blog2017 (4) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has paid the interest on the entire demand after 08.05.2010 till payment - the demand of interest and the penalty imposed u/s 76 is unsustainable. However, the late fee imposed u/s 70 of the FA, 1994 upheld. Appeal disposed off - decided partly in favor of assessee. - ST/2960/2011 - A/30528/17 - Dated:- 11-4-2017 - Ms. Sulekha Beevi, C.S., Member (Judicial) Shri G. Vijaya Balan, for the Appellant Shri Nagaraj Naik, Deputy Commissioner (AR) for the Respondent ORDER [Order Per Sulekha Beevi, C. S.] 1. The appeal is filed against the order passed by Commissioner (Appeals) who upheld the interest and penalties imposed by the adjudicating authority. 2. The appellant is registered under category of Renting of Immovable Property Service. They did not discharge their service tax liability on the said services for the period from 1.04.2008 to 30.09.2008 and 1.10.2008 to 31.03.2009. Appellants were issued Show Cause Notice on 15.02.2010 proposing to recover an amount of ₹ 1,90,676/- towards service tax on Renting of Immovable Property Service for the above said period along with interest and also proposing to impose penalties. After due process of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant is not liable to pay interest prior to this date and also not liable for penalty since the service were made taxable with effect from 01.07.2007 retrospectively. The Finance Bill was introduced on 26.02.2010 and it received assent of the President on 08.05.2010. The appellant paid service tax of ₹ 1,90,676 demanded on said services from 01.04.2008 to 31.03.2009 as raised in the Show Cause Notice dated 15.02.2010. The interest due from 08.05.2010 to 27.01.2012 to the tune of ₹ 47,321/- was paid along with Service Tax on 28.01.2012. Therefore the Appellant has discharged the interest from date on which the Finance Bill, 2010, received the assent of the President (08.05.2010). He relied upon the judgment of Hon ble Supreme Court in the cause of STAR INDIA (Pvt) LIMITED V/s CCE Mumbai (Goa) 2006 (1) STR 73 (SC). That in the said judgment, in a similar situation, where, the Broad Casting Service was made taxable retrospectively, the Hon ble Apex Court held that no interest was leviable or penalty can be imposed in such cases of retrospective levy of tax. The Ld. Counsel has referred to the validation clause contained in the Finance Bill 2010. It is submitted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t brought forth in Finance Act, 2010. The services thus became taxable with effect from 01.06.2007. The Finance Bill received assent of the President on 08.05.2010. The contention of appellant is that when the levy is made retrospectively, the liability to pay the interest starts only when such Bill receives assent of the President and comes into force. That interest cannot be demanded retrospectively. The Ld. Counsel relied upon the judgment in the case of Star India Pvt. Ltd. 9. The Hon ble Apex Court in the case of Star India Pvt. Ltd., held that interest need not be paid for the liability it is created retrospectively. The relevant para is quoted as under: 6. Factually, this appears to be incorrect. From the decision of the Tribunal it is clear that the Tribunal had in fact held that the appellant was liable by reason of the amendment to the term broadcasting effected by the Finance Act, 2002. 7. In any event, it is clear from the language of the validation clause, as quoted by us earlier, that the liability was extended not by way of clarification but by way of amendment to the Finance Act with retrospective effect. It is well established that while it is permissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect for the period 16.11.1997 to 1st June, 1998 in the Finance Act, 2000 which received the assent of the President in May, 2000. From above it is clear that service tax was not applicable for the period from 16.11.1997 to 1st June, 1998. It was made applicable from May, 2000 with retrospective date from 16th Nov., 97. Any penal provision cannot be made effective from retrospective date. They can only be prospective. They liability to pay the tax arises against the appellant after revalidation of Section 117 of the Finance Act, 2000. 5. In present case also the duty was made effective from May, 2000 for the period 16.11.97 to 1st June, 1998. Prior to it, it was declared ultra vires by the Hon ble Apex Court. Consequently, the appellant was not under an obligation to discharge the duty liability pertaining to period 16.11.97 to 1st June, 98. The contention of the learned Commissioner (Appeals) is not acceptable. Learned Commissioner of Appeals has mentioned in his impugned order the normal course for the appellant would have been that they should have paid the tax, followed the procedure and claim refund like others . The levy of tax was not in force from 16.11.1997 to 01.06.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spective effect, for actions taken by the department under Rules, Notifications, Orders etc. amended, superseded, rescinded, repealed etc. Thus the SCN dt. 1-08-2000 issued under the omitted Rule 173GG became operative by virtue of the retrospective operation of the provisions of Section 38A of the Act. Section 132 of the Finance Act revalidated actions already taken under omitted Rules. However, the Explanation to this Section protected persons targeted by such actions, from penalty. This provision declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if the Section had not come into force. The appellants are entitled to the benefit of this Explanation to Section 132 of the Finance Act, 2001 and, accordingly, the penalties imposed on them are vacated. 4. As regards interest, reliance has been placed on the apex court's judgment, which reads as under: The liability to pay interest would only arise on default and is really in the nature of a quasi-punishment. Such liability although created respectively could not entail the punishment of payment of interest with retrospective effect. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll material times. Explanation - For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable had this amendment not come into force. 13. It is seen stated in the above clause, that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable had this amendment not come into force. On the basis of the judgment rendered by the Hon ble High Court of Delhi in Home Solutions Retail India Ltd. (supra) during the relevant period, no demand of service tax of renting of immovable property could be made in the abscence of the amendment. From the above, it is clear that the appellant is not liable to pay interest prior to 08.05.2010 and also the penalty. The appellant has paid the interest on the entire demand after 08.05.2010 till payment. Following the judgments cited above I hold that the demand of interest and the penalty imposed under Section 76 is unsustainable. However, I do not interfere with the late fee imposed under Section 70 of the Finance Act, 1994. The impugned order is modified to the extent of setti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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