Full Judgment
2. I have heard Shri R.K. Chandan, Ld. JDR appearing for the revenue.
The respondents are absent and have filed written submissions.
3. As per the facts on record, the respondent, who are Chartered Accountants, filed a writ petition before the Hon'ble High Court of Gujarat challenging levy of Service tax on the Chartered Accountants.
The Hon'ble High Court granted interim relief to the respondents and stayed recovery of the tax from them. However, ultimately the writ petition challenging the validity of the service tax on Chartered Accountants was decided by the Hon'ble High Court with directions to the respondents to pay the tax on or before 28/02/2001. It was also directed in the said judgment that no penal action would be taken against the fraternity of Chartered Accountants, if they pay the arrears of the tax by 28/02/2001. There is no dispute that the tax arrears were paid by the respondents before the said date.
4. In view of the above background, the original adjudicating authority did not impose any penalty upon the respondents. However, he charged interest on the service tax due from the respondents on the ground that "penal action" does not include charging of interest. The respondents again approached the Hon'ble High Court by way of filing a miscellaneous application seeking clarification of their orders and the said application was disposed of vide order dated 21/12/2001 clarifying that the earlier order intended to protect the Chartered Accountant's association against the adverse consequences arising from delay on payment of service tax on account of pending petitions, with interim relief in favour of petitioners.
5. The respondents also filed an appeal against the order of the adjudicating authority before the Commissioner (Appeals). The said appeal was allowed by the appellate authority. Hence the present appeal.
6. I find that the Commissioner (Appeals) has referred to the clarificatory order of the Hon'ble High Court on the application filed by the Chartered Accountant's association. Para 7 of the said order reads as under:- "Having heard the learned counsel for the parties, we are of the opinion that since by way of interim relief granted on 11.03.99 and 12/05/99, this court had restrained the respondent from giving effect to the impugned provisions for levy of service tax, but had not imposed any condition regarding payment of interest and since we found the request made on behalf of the petitioners for some time to pay up service tax as reasonable, we intended that the members of the petitioner association may not be made to suffer any adverse consequence on account of delay in payment of service tax if the payment was made within two months i.e. 28 02 2001. As per the settled legal position, the principle of restitution would apply, if the court had not given any direction while dismissing the petitions. As stated above, it had intended to protect the members of the petitioner association against adverse consequences arising from delay in payment of service tax on account of pending petitions with interim relief in favour of petitioners. In our view, the provisions of section 75 will have to be read in light of the aforesaid interim relief and the final direction and, therefore, it cannot be said that even if the concerned members of the petitioner association had paid up the service lax by 28/02/2001, they had not paid the tax to the Central Government within the period prescribed".
As such, the Commissioner has observed that it is very much patent that the directions given by the High Court, not to impose any penal action on the respondents includes non levy of interest.
7. The revenue in their memorandum of appeal have contended that penal provisions and charging of interest are two separate provisions under the law and the directions of the High Court not to impose penalty cannot be said to include directions not to charge tax. Shri Chandan has drawn my attention to the Hon'ble Supreme Court's decision in the case of Pratibha Processors v. Union of India (1996 (88) ELT 12 (SC).
Para 13 of the said decisions reads as under :- "In fiscal statutes, the import of the words "tax", "interest", "penalty", etc. are well known. They are different concepts. Tax is the amount payable as a result of the charging provision. It is a compulsory exaction of money by a public authority for public purposes, the payment of which is enforce by law. Penalty is ordinarily levied on an assessee for some contumacious conduct or for a deliberate violation of the provisions of the particular statute. Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. The levy of interest is geared to actual amount of tax withheld and the extent of the delay in paying the tax on the due date. Essentially, it is compensatory and different from penalty which is penal in character. " 8. In view of the above, the Ld. JDR has submitted that the interest and penalty are independent of each other and in the absence of any specific directions by the Hon'ble High Court, the interest is required to be charged.
9. I have considered the submissions made by the Ld. JDR and have gone through the impugned order of the Commissioner (Appeals). In my views, the appellate authority has rightly referred to para 7 of the High Court's order passed on the miscellaneous application seeking clarification. The observations made by the High Court that it had intended to protect the members of the petitioner's association against the adverse consequences arising from the delay on payment of service tax and the provisions of Section 75 will have to be read in light of the aforesaid interim relief clearly reflect upon the fact that the interest was not to be charged if the service tax is deposited up to 28/02/2001. There is no doubt that the service tax stands deposited by the said date. I also find that the revenue in their memorandum of appeal had taken a ground that the department is contemplating to file an appeal against the order dated 27/12/2000 of the Hon'ble High Court, in respect of the levy of interest on delayed payment of tax. This fact itself reflects upon that the Gujarat High Court's order is being considered by the appellants on favour to the respondents as far as the levy of interest is concerned.
10. In view of the above, I do not find any merits in the revenue's appeal and reject the same.