1. This appeal is directed against the order is appeal dated 02/10/2004 wherein the Commissioner (Appeals) has upheld the order in original wherein interest was imposed and confirmed against the appellants.
2. The appellants is a practicing chartered accountant and were liable to pay the Service Tax. The Chartered Accountant association of Rajasthan unsuccessfully challenged the imposition of the Service Tax in the Hon'ble High Court of Rajasthan, but the Hon'ble High Court granted the Chartered Accountants Association time to pay up Service Tax dues.
3. The learned Advocate appearing for appellant submits that the Service Tax dues were paid by the appellants on 11/06/2003 & 18/6/2003.
He fairly submits that the time limit granted by the Hon'ble High Court expired on 15/10/2002. It was submitted that the Hon'ble High Court had left open the issue of imposition of interest to the authorities. He submits that the interest levied by the department is for the whole period for which the Service Tax was not paid by the appellant. It was his submission that as there was interlocatory stay for the imposition and recovery of the Service Tax dues. The interest sought to be recovered was also covered in the said order and hence no interest is liable to be charged for the whole period up to 15/10/2002. He relies upon the following decisions for the said proposition: i) Misc. order dated 21/12/2001 in Special Civil Application No. 469 of 1999 of the Hon'ble High Courts Gujrat.C.C.E. Rajkot v. J.K. Gori & Associates - 2005 -182- RLT-502 (Tri Mumbai) He submitted alternatively that, even if interest is chargeable then, it should for the period of delayed payment by the appellant i.e. for the period 16.10.2002 to June 2003.
4. The learned Department Representative submits that the interest issue was left open by the Hon'ble High Court to the authorities and as the appellant had not complied with the direction of the Hon'ble High Court, the interest is correctly changed Under Section 75 of the Finance Act 1994.
5. Considered the submissions made by both sides and perused the records. I find from the records that the appellant has discharged the Service Tax liability in June 2003, much after the time limit granted by the Hon'ble High Court. The Hon'ble High Court of Rajasthan in an order dated 16/8/2002 had directed the Chartered Accountants Association of Rajasthan, (of which appellant is a member) as follows.
... Learned Counsel has also brought to out notice a clarification made with respect to the demand of interest. It is for the department to consider after hearing the parties. However, we permit two months time to the practicing Chartered Accountants to comply with the requisite formalities prescribed under the Service Tax Law and to pay the arrears of Service Tax. We expect that the department will not take any penal action against the practicing Chartered Accountants.
From the above it can be seen that the Hon'ble High Court had granted time to the appellant till 15/10/2002 to pay off all the dues of Service Tax. This extension is in addition to the interlocatory stay order granted by the Hon'bie High Court. The appellant should have adhered to the direction of the Hon'bie High Court and deposited all the dues by 15/10/2002 and then he may have had a case of non-imposition of interest. The Revenue authorities have not imposed any penalty on the appellants.
6. The interest for delayed payment of Service Tax is chargeable under the provisions of Section 75 of the Finance Act 1994. The said Section 75 of Finance Act 1994 is as follows: Section 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 thereunder, who fails to credit the tax or any part thereof to the account of the Central Government within the period [prescribed], shall pay simple interest at the rate of [fifteen per cent. Per annum] for the period by which such crediting of the tax or any part thereof is delayed.
From the plain reading of the above Section it can be said that the interest which is charged is a Simple interest and the interest is changeable for the period for which the tax or the part thereof is delayed. In the present case the appellant has not discharged the Service Tax liability from the date of imposition and approached the Hon'ble High Court. The Hon'ble High Court under the powers of Article 226, granted immunity to the appellant from penal provisions but left the interest portion open to the authorities to decide. If the appellants would have discharged the Service Tax liability by 15/10/2002 the adjudicating authority might have taken, a lenient view.
But the appellant has delayed the payment of Service Tax beyond the time granted by the Hon'ble High Court. The case laws cited by the appellant in their favour are not of much help to them for the simple reason that in the case of J.K. Gori & Associates (Supra) the Service Tax liability was discharged by the date as directed by the Hon'ble High Court. The appellant's reliance on the Misc. Order of the Hon'ble High Court of Gujrat is also misplaced, in as much, that the Hon'ble High Court has directed to read the provisions of Section 75 in light of the interim Relief and final direction of that High Court. To my mind the final direction of the Hon'ble High Court of Rajasthan, was not complied by the appellant and hence appellant cannot claim any leniency.
7. The decision of the Hon'ble Supreme Court in the case of Commissioner of Trade Tax Lucknow v. Kanhairam Thekedar as reported at (SC) wherein as Para 17 it was held that "Interest liability accrues automatically".Haji Lal Mohd. Biri Works v. State of U.P. Argument has also been advanced by Mr. Sen that the interest on arrears of sales tax could not be realized for the period during which the recovery of sales tax was stayed. We find it difficult to accede to this contention because there is nothing in the language of Section 8(1A) of the Act which prevents the running of interest because of the operation of nay stay order. Indeed, the liability to pay interest is created by the statute and the Sales Tax Officer has no discretion to grant any exemption from the payment of interest.
The learned Commissioner has correctly relied upon the above said decision and dismissed the appeal. I concur with the decision of the Commissioner (Appeals) and to my mind no interference is required in the said order. The appeal is dismissed.