SREE INFRA TECH Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellant undertook maintenance and repair of roads during the period April 2008 to 31st March 2009. They were not collecting service tax on such activity and remitting to government during the said period. On audit of the books of accounts of the appellant in Aug 09, the departmental officers pointed out that such activities would attract service tax and an amount of Rs. 11,74,726/ - was due from them. Thereupon, the appellant collected the service tax amount from the customers to whom they rendered services and paid the service tax. However, no interest was paid. Therefore, the department issued show cause notice for recovery of tax not paid in time and also for appropriating tax subsequently paid and also demanding an interest amount of Rs. 1,31,888/ -. By the time of adjudication, Section 97 was inserted in Finance Act, 1994 exempting service tax in respect of management, maintenance and repair service retrospectively from 16 -05 -2005, by Finance Act 2012. Consequently at the time of adjudication, the demand for tax was dropped. The adjudicating authority ordered that the amount already paid by the appellant be credited to the Consumer Welfare Fund in terms of Section 73A(6) of the Finance Act, 1994. Further the demand for interest of Rs. 1,21,011/ - was confirmed against the appellant. Aggrieved by the order, the appellant filed appeal with Commissioner (Appeals). The Commissioner (Appeals) modified the order of crediting the money to Consumer Welfare Fund and ordered that the amount shall be restored to the government account. However, he did not give any relief in respect of the interest demanded from the appellant. Aggrieved by the order of Commissioner (Appeals), the appellants have filed this appeal. The appellant is not contesting the tax amount collected and remitted to government account. He is only contesting the demand of interest from the appellant. The argument of the Counsel for appellant is that when the principal amount itself was not payable, demand for interest is not sustainable. Therefore, he prays that demand for interest may be set aside.

(2.) LD . AR for Revenue submits that appellant had collected the amount on 16.9.2008 and on 3.10.2008 and these amounts were actually remitted only on 5.10.2009 and therefore there was delay in paying the tax amount and interest demanded is maintainable.