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TMI Blog2025 (5) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriated towards interest against the said confirmation. Penalty of Rs. 42,98,732/- under Section 76 of Finance Act 1994 (Act) was also imposed on the appellant. 3. The issue, in brief, is that the appellant are the Master License Agreement holders for the software solutions developed by their parent company M/s AutoForm Engineering GmbH, who has licensed them to the appellant who in turn is providing the same software to various customers in India. They have been paying royalty at certain rate to their parent company in respect of said software being licensed to them. The Department felt that the appellant is required to pay duty in respect of royalty paid to their parent company under Reverse Charge Mechanism (RCM). Initially, the demand was worked out at Rs. 6,75,38,582/- for the period 2013-14 to June 2017. However, it was felt by the Department that the extended period cannot be invoked in the facts of the case and therefore demand was restricted only to the normal period from October 2015 to June 2017 amounting to Rs. 4,29,87,324/-. This amount was already paid by the appellant on 29.06.2018 along with an amount of interest of Rs. 2,78,973/-. Department felt that the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest has to be complied with. He has also relied upon judgment by a co-ordinate bench in BCCI in India Vs Commissioner of Service Tax-II, Mumbai which relied on decision of Larger Bench in the case of Jay Yushin [2000 (119) ELT 718 T- LB] in support that interest is payable. He has also relied on judgments in the case of Cords Cable Industries Ltd., Vs Commissioner of CGST &ST, Alwar, Rajasthan [2024 (12) TMI 673 - CESTAT, New Delhi], Sri Venkateshwara Bhakti Channel Vs CCE, C & ST, Tirupathi vide Final Order No. A/30005-30007/2023 dated 01.02.2023 and Annapurna Earcanal Ltd., Vs CC, CE & ST, Hyderabad-III vide Final Order No. A/31104-31112/2018 dated 24.09.2018. 7. Heard both the sides and perused the records. 8. We find that as far as the issue on merit is concerned, there is no doubt that appellants were required to discharge service tax under RCM in respect of royalty amount paid to their Principal abroad from whom they had received the licence for further sub-licensing to various customers in India. As far as, nature of duty and the legal requirement to pay the same is concerned, the appellants are not disputing, but contesting that in this case, if they would have paid the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 752 (Tri-Mumbai)] ii) Commercial Engineers & Body Builders Vs CCE, Bhopal [2017 (1) TMI 298 - CESTAT- New Delhi] iii) Steel Authority of India Ltd., Vs Commissioner of Central Excise, Bolpur [2023 99) TMI 915 - CESTAT-Kolkata] iv) JSL Ltd., Vs Commissioner of Central Excise, Bhubaneswar - I [2024 (3) TMI 488 - CESTAT Kolkata] v) Jai Balaji Industries Ltd., Vs Commissioner of Central Excise, Bolpur [2024 (20) Centax 146 (Tri-Cal)] vi) Commissioner of Central Excise, Bolpur Vs Jai Balaji Industries Ltd., [2024 (20) Centax 147 (Cal)] They have also contested that the tax itself was not payable however, it was paid voluntarily. 12. We now proceed to examine various case laws relied upon by the appellant as to why the interest and penalty cannot be levied. However, before we proceed, we need to look at relevant statutory provisions for both interest and penalty under the Finance Act. The relevant extract of Section 75 is reproduced below: "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 Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t [2009-TIOL-530-CESTAT-AHM]. Primarily, in these judgments the demand itself was set aside in a revenue neutral situation and since demand was set aside, further demand of interest and imposition of penalty also failed. 14. We find that the Adjudicating Authority has relied on several case laws in support of holding a view that interest is payable as well as penalty is also imposable. He has relied on the provisions under Section 75 which clearly states that the interest is required to be paid on non-payment or short payment of service tax. He has relied on the various case laws including the following case laws: a) Shri Mahakali SSK Ltd., Vs CCE, Kolhapur [2019 (28) GSTL 293 (Tri-Mumbai)] b) CCE, Thane-II Vs Standard Greases [2017 (350) ELT 123 (Tri-Mumbai)] c) Commissioner of C.Ex., Chennai-III Vs Supreme Industries Ltd., [2014 (303) ELT 513 (Mad)] d) Commissioner of C.Ex., Puducherry Vs Cestat, Chennai [2014 (35) STR 32 (Mad)] e) CCE, Bangalore-II Vs Alsthom Instrument Transformers [2015 (322) ELT 297 (Kar)] In these judgments, Hon'ble High Courts have taken a consistent view that payment of interest is mandatory under Section 75 of the Finance Act and in fact, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as alleged by the appellant. Further, for invoking Section 75, there is no need for invoking any suppression, wilful misstatement, malafide intent etc. Therefore, we find that the Adjudicating Authority is correct as far as demand of interest is concerned. 16. In relation to penalty also, we find that there is no need to establish any malafide intent or suppression or intention to evade service tax etc., for imposing penalty under Section 76, if the non-payment or short payment is established. The reliance placed by the Adjudicating Authority, in the case of Assistant Commissioner of Central Excise Vs Krishna Poduval [2005 (199) CTR Ker 581 = 2006 (1) STR 185 (ker)], Board of Control for Cricket in India Vs Commissioner of S.Tax, Mumbai-II [2019 (29) GSTL-304 (Tri-Mum)], CCE and Customs Vs Port Officer [2010 (19) STR 641 (guj)] and many other cases are relevant: i) CCE Vs S.J.Mehta & Co. [2011 (21) STR 105 (Guj)] ii) CCE Vs Bhavani Enterprises [2011 (21) STR 107 (Guj)] iii) CCE & ST Vs First Flight Couriers Ltd., [2007 (8) STR 225 (Kar)] iv) UOI Vs Aakar Advertising [2008 (11) STR 5 (Raj)] v) UOI Vs Shiv Ratan Advertisers [2008 (12) STR 690 (Raj)] Hon'ble High Courts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is settled matter that the interest is payable on such tax. The appellant's reliance on the case of CCE, Pune Vs Coca-Cola India Pvt Ltd., supra, is also not well founded as in this case though plea of revenue neutrality was taken in a given fact, the Hon'ble Supreme Court, inter alia, dismissed the appeal of the Department leaving the question of law open. In Cords Cable Industries Ltd., at para 7, supra, it was, interalia, observed that it is a settled position of law that what is admitted need not be proved. Therefore, this reliance for not demanding duty itself is also not correct. Similarly, the reliance placed in the case of Commissioner of Central Excise & Customs, Vadodara Vs Narmada Chematur Pharmaceuticals Ltd., [2004 (12) TMI 93 (SC)] is also not applicable to the facts of the case, as in all these issues Hon'ble Supreme Court has left the issue of law open and therefore there is no general law that the revenue neutrality, per se, will become the sole ground for not raising any demand under the Statutory Provisions of the law. 20. To recap the background leading to demand and payment thereof, it is observed that it started on the basis of audit in May 2018. On being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground of revenue neutrality cannot be interpreted in a manner so as to nullify the entire demand itself and as a consequence also nullifies the demand of interest and imposition of penalty under Section 76 also. 22. Therefore, in the overall facts of the case and various case laws cited by both the sides, we are of the considered opinion that the plea of revenue neutrality for non-maintenance of demand, per se, and consequentially non- recovery of interest as well as non-imposition of penalty under Section 76 is not tenable. We, however, find that there has been substantive compliance by the appellant when they paid the non-paid service tax even before the issue of show cause notice and in fact paid some interest thereon. We also note that there is no allegation of any suppression, fraud etc. The Adjudicating Authority has imposed penalty under Section 76 at the maximum permissible. We find that in the facts of the case, the penalty of Rs. 10,00,000/- would be just and accordingly modify the amount of penalty imposed. 23. In view of the same, we find no infirmity in the order of the Commissioner except to the extent modified, supra, and accordingly upheld the impugned order. ..... 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