Commissioner of C. Ex. and Cus., Kochi vs Oriental Steel Trunks Agrico Industries

Ramachandran Nair, J.—Heard Standing Counsel for the appellant and counsel appearing for the respondent. The respondent who was liable to pay service tax, declined to remit the same. However, before penalty notice was issued, respondent paid the service tax with interest. Even though penalty levied was sustained by the first appellate authority, Tribunal cancelled the penalty by taking into account the voluntary payment of service tax with interest before show cause notice was issued. We do no find any justification to interfere with the order of the Tribunal because in this case even though assessee committed default, assessee made payment before issuance of show cause notice. Counsel for the respondent has also relied on Circular published by the Department granting time for compliance with statutory provision in regard to payment of service tax. However, we find force in the contention of the appellant that the Tribunal had no authority to discuss about respondent''s claim for refund of interest. We, therefore, vacate this part of the Tribunal''s order declaring respondent''s entitlement for refund of interest because interest is not connected with penalty. Interest is to be computed in accordance with the statutory provisions for the delay in payment form the due dated on which service tax is payable under the Act. If excess interest is paid, it is for the respondent to claim refund of interest in accordance with the procedure prescribed under the Rules and not for the Tribunal to consider the matter while disposing of the penalty appeal. The appeal is allowed in part to this extent and is dismissed on the penalty question.