1. This appeal is directed against Order-in-Appeal dated 31.3.2005 wherein the Commissioner (Appeals) has upheld the Order-in-Original imposing penalty and interest on the appellants.
2. The relevant facts that arise for consideration are that the appellants were recipient of service from goods transport operators for the period 15.11.97 to 2.6.98. The said provision was challenged in different forums and finally by retrospective amendment of Finance Act, 2003 all the persons who were availing GTO services during the period 16.11.97 to 2.6.98 were made liable to pay the service tax. The said Finance Act, 2003 got assent of the President on 17.5.2003 and the appellants were required to submit the service tax return by 13.11.2003. The appellants deposited the service tax with the Government on 3.2.2004 and filed the return on 13.2.2004. Show cause notice was issued to the appellants seeking imposition of penalty under various sections and also to impose interest under Section 75 of the Finance Act, 1994. On adjudication the adjudicating authority imposed the penalty under different sections and also sought to recover interest from the appellants under Section 75 from 12.6.2000 till the date of payment of service tax. On appeal the Commissioner (Appeals) did not give any relief to the appellants and he also upheld the order of the adjudicating authority in to-to. Hence, this appeal.
3. Learned Advocate appearing for the appellants submits that payment of service tax on the services received from GTO was in a very fluid situation and it was being contested in various judicial forums. The fact that there was retrospective amendment in Finance Act, 2003 goes itself to show that there is dispute. Hence, he submits that the appeal of the appellants is restricted to imposition of penalty and the interest. He relies upon the provision and submits that since there was a fluidity in the situation, no penalty is imposable and interest is also not imposable.
4. Learned D.R. on the other hand submits that the appellants ought to have known the fact that the Finance Act, 2003 was given assent by the President on 17.5.2003 and hence, they are required to file the returns of the services received by them from GTO by 13.11.2003 and discharge the duty liability along with interest. But they have paid the service tax only by 3.2.2004, hence, they have been correctly penalized.
5. Considered the submissions made by both sides and perused the record. I find from the record that the departmental officer i.e.
Suptd. of Central Excise has been in correspondence with the appellants in respect of service tax payable by them on the services received by them from GTO. The last letter which was addressed by the Range Suptd.
to the appellants was of 23.1.2004 wherein the Suptd. instructed the appellants as follows: As such you are requested to deposit the service tax on GTO services received by you for the period from 16.11.97 to 1.6.98 along with interest as applicable. Please also submit ST-3 return accordingly.
In respect of this letter the appellants vide their letter dated 12.2.2004 informed the Range Suptd. that they have deposited the amount of service tax on the services received by them from GTO by TR-6 challan No. 1 dated 3.2.2004 and also filed the return.
6. I find from the above correspondence that the department as well as the appellants before me were in confused state during the relevant period since the department directed the appellants to pay service tax along with interest only on 23.1.2004. To my mind, the penalty sought to be imposed on the appellants would be unwarranted and unjustified.
The appellants have deposited the total amount of service tax to the tune of Rs. 34.89 lakhs in response to letter of the Suptd. of Central Excise. Since the appellants responded to the letter of the Suptd., to my mind, they are not required to be saddled with the penalty. Hence, penalty imposed on the appellants under various sections in Order-in-Original and as upheld by the Commissioner (Appeals) are liable to be set aside.
7. In respect of interest I find that the Suptd. letter dated 23.1.2004 was a clear indication to the appellants as to their liability to pay interest. I find Section 75 of the Finance Act, 1994 has provided for charging interest at a simple rate on the service tax which was not paid by an assessee. In view of this the appellants are liable to pay interest on the amount of service tax not deposited by them as ordered by the adjudicating authority. Appeal is allowed partly to the above extent.