Whether time limit is applicable on demand for interest?

PJ/Case Law/2014-15/2241

Case:- M/s OIL AND NATURAL GAS CORPORATION LTD Vs COMMISSIONER OF CENTRAL EXCISE AND SEVICE TAX, SURAT-II

Citation:-2014-TIOL-1175-CESTAT-AHM

Brief facts:-Demand of interest made for delay in payment of duty during the period October 2007 to March 2012 on 18.04.2013. Hence, the question is whether the time limit for issuance of show cause notice is applicable to demand pertaining to interest also.

Appellant’s contentions:- Shri D.K. Trivedi, Advocate appearing on behalf of the appellant argued that there was a delay in payment of periodical duty from the Cenvat Credit which was belatedly paid during the period July 2010 to March 2012. It was his case that there were sufficient balance in the Cenvat account of the applicant, therefore, no interest was demandable in the present proceedings. He further contended that the demand show cause notice in the present case had been issued after a period of one year and as per Delhi High Court's order in the case of Kwality Ice Cream Company Vs. Union of India [2012 (281) ELT 507 (Del.)] = 2012 TIOL-252-HC-DEL-CX, demand was time barred.

Respondent’s contentions:- Shri K.J. Kinariwala (A.R) appearing on behalf of the revenue argued that for demand of interest no time limit was applicable and accordingly defended the order passed by the adjudicating authority. He also held that the entire demand was not beyond the period of one year as the required returns were required to be filled on half yearly basis.

Reasoning of judgment:- Heard both sides and perused the case records. So far as applicability of limitation of one year was concerned, the Hon’ble judge held that the judgment passed by Delhi High Court will have relevance and it, prima facie, conveyed that the demand of interest had also to be issued within one year. However, it was seen from the Annexure to the show cause notice dt. 18.04.2013 that the demand period was from October 2007 to March 2012 and the periodical duty paying returns in service tax matter were also required to be filed on half yearly basis. In view of the demand provisions, the entire period was not beyond one year. Appellant has, therefore, not made out a prima facie case for complete waiver of the confirmed demands as on merits once there was a delay in payment of duties, the interest was required to be paid on the period of delay. Appellant was, accordingly, directed to pre deposit an amount of Rs.50,000/- within four weeks and report compliance to the bench by 20.06.2014. Subject to the payment of the above amount, there would be stay on recovery on the remaining amounts till the disposal of this appeal.

Decision:- Pre-deposit ordered.

Comment:- The analogy drawn from the case is that the time limit applicable for demand of duty is also applicable for demand of interest on delayed payment. Thus, if there was no fraud, wilful misstatement or suppression of facts with intend to evade payment of duty, the normal time period of one year would apply. Accordingly, as in the present case, the assessee was regularly paying tax and filing service tax returns, no suppression could be alleged and the extended period of limitation for the demand of interest was not invokable.

Prepared by:- Ranu Dhoot

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PJ/Case Law/2014-15/2241

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