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Judgment
This appeal is directed against the impugned order dated 30.9.2015 passed by the Commissioner (Appeals), Service Tax, New Delhi, upholding the
service tax demand along with interest and penalty confirmed in the original order. The adjudged demand was confirmed against the appellant on the
ground that it did not pay the service tax dues for the period November'2005 to March' 2006 on the taxable services provided by it.
Shri K.P. Singh, learned Consultant appearing for the appellant submits that due to inadvertence, the appellant did not reverse its Cenvat account
within the stipulated time for discharging its service tax liability towards provision of the taxable services. He submits that since sufficient Cenvat
credit balance was available in the books for payment of service tax liability, mere non-entering the said tax amount in the debit column of the Cenvat
account cannot create the interest liability. Thus, he submits that there is no loss to the Government exchequer, and as such, interest and penalty
cannot be imposed on the appellant.
On the other hand, ld. A.R. for Revenue reiterates the findings recorded in the impugned order.
Heard both sides and perused the records.
I find that Service tax liability has not been discharged by the appellant within the stipulated time prescribed in Rule 6 of the Service Tax Rules,
1994. Thus, interest liability is automatic and as such, confirmation of such liability by the authorities below is in conformity with the statutory
provisions. However, I find that imposition of equal amount of penalty under Section 76 of the Finance Act, 1994 is not proper and justified inasmuch
as the statute mandates for imposition of penalty in case of nonpayment of service tax within stipulated time, which is to the tune of Rs.100/- per
every day for failure to pay the dues or @ 1% of the tax per month, whichever is higher, subject to the condition that amount of penalty payable in
terms of this Section shall not exceed 50% of the tax payment. Since there is no specific mandate under Section 76 ibid that equal amount of penalty
can be imposed, I am of the view that impugned order imposing penalty of equal amount of tax is not sustainable under law. Since nothing is available
on record to show the time of payment of the tax amount, it is difficult to calculate the exact amount of penalty, which can be payable by the
appellant. Therefore, the matter needs to go back to the original authority for quantification of the quantum of penalty under the unamended provisions
of Section 76 ibid.
In view of the foregoing, the impugned order is confirmed to the extent of demand of service tax of Rs.1,41,653/- along with interest. For
quantifying the penalty under Section 76 ibid, the matter is remanded back to the original authority for proper computation of the quantum of penalty.
The appeal is disposed of in above terms.