1. The issue involved in this case is regarding imposition of interest under Section 75 of the Finance Act, 1994 and imposition of penalty under Section 76 of the Finance Act, 1994.
2. The relevant facts that arise for consideration are that the appellants were recipient of services from goods transport operators and C & F agencies. The appellants were required to pay service tax for the period 16.11.97 to 1.6.98 for the services received by them from these two service providers. The appellants deposited the service tax liable to be paid by them in February, 2004. The Revenue issued show cause notice to the appellants on 8.11.2004 for demand and recovery of interest and imposing penalty. The adjudicating authority ordered to recover the interest and also imposed penalty of equivalent amount. On appeal the Commissioner (Appeals) also concurred the views of the adjudicating authority.
3. Considered the submissions made by both sides at length and perused the record. The challenge of the appellant in this case is regarding recovery of interest period. It is the submission of the appellants that the interest, if at all is to be recovered from them, it has to be recovered from 14.11.2003 till the date of payment of service tax. As regards penalty it is the submission that no penalty is imposable on them since the amount has been already deposited prior to issuance of the show cause notice.
4. Identical issue was considered by this Tribunal in the case of Greenply Industries wherein the Tribunal has held as under: A plain reading of Section 158 would reveal that provisions were inserted to Section 68, in order to bring the category of receiver of the services of GTO as the person liable to pay service tax. It can be seen that till this retrospective amendment the payment of service tax under Section 68 was to be made only by the service provider. After the retrospective amendment in Finance Act, 2003, the receiver of the services from G.T.O. was also made liable to pay service tax. Since the calculation of service tax liability would have been a bone of contention, the Finance Act, 2003, sought to insert a new Section 71A to make the receiver of services of G.T.O. to file returns. This insertion was necessitated as the provisions of Sections 69 & 70 of Finance Act, 1994 applied only to service provider. By inserting Section 71A, the Finance Act, 2003 made the service receivers to file return to the authorities to ascertain the service tax liability. The said Section 71A also granted time of six months from the date of assent of the bill by the President. The Finance Bill 2003 received the assent of the President on 16.5.2003.
This would imply that the service receivers, were required to file the returns by 17.11.2003 and discharge their service tax liability.
It can be seen that by bringing this Section 71A in the statute, the liability to discharge the service tax was extended up to 17.11.2003. In other words, if an assessee does not pay his service tax liability by 17.11.2003, the interest liability gets fastened on to the assessee till the payment of service tax.
8. The Hon'ble Supreme Court in the case of Gujarat Ambuja Cements Ltd. (supra) was seized with the challenge to the Section 71A wherein, the Hon'ble Supreme Court in its interim order had granted the petitioner a further period of 2 weeks from 17.11.2003 to file return and discharge the service tax due. Since the Hon'ble Supreme Court has granted a further period of two weeks for filing the return and discharge the service tax liability, the interest liability, if any, on the appellants, will be from the period subsequent to the two weeks from 17.11.2003. In this case the appellants have deposited service tax liability on 13.1.2004 and 1.2.2004 and hence interest liability on the appellants will accrue from the expiry of two weeks from 17.11.2003, till the discharge of Service Tax liability by the appellants.
5. The ratio of the Tribunal's decision in the case of Greenply Industries squarely covers the issue before me. The interest, if at all is chargeable, it is to be chargeable after 2 weeks from 14.11.2003 till the date of payment of service tax by the appellants. As has been held in the case of Greenply Industries, no penalty would be imposable on the appellants under Section 76 of the Finance Act, 1994.
6. Accordingly, the impugned order is set aside to the extent of penalty imposed on the appellants and upheld to that part of the interest which is liable to be paid by the appellants. Appeal is partly allowed.