2018 (10) TMI 660 – CESTAT HYDERABAD – TMI – Demand of Interest – delayed payment of service tax – renting of immovable property services – assessee claimed bonafide belief and stated that the delayed payment of tax was due to legal uncertainty about the taxability of the service – absence of any letter requiring assessee to pay interest by Revenue – Section 73(3) of FA – Held that:- After receiving the intimation on 18.6.2012, the department should have determined the interest payable and communicated to the assessee and if the assessee did not pay the same, they had one year period for issuance of show cause notice. In this case, without intimating to the assessee that he is liable to pay interest and they should pay the same, the Officers proceeded to issue show cause notice straightaway.
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Section 73(3) contemplates non issue of show cause notice in the event of an assessee paying full amount of service tax with interest. When the section and provisos are read together, in thi
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ase in brief are that the appellants M/s Livewell Estates Pvt. Ltd., Vijayawada are registered with Service Tax under the category of Renting of Immovable Property Service and Construction of Residential Complex Service . Appellant gave its building on lease to M/s Chermas Exquisite Limited from 01.07.2008 to 31.05.2026 vide lease deed dated 16.06.2008. Consequent to audit of appellant s books of accounts in 2013, show cause notice dated 24.08.2016 was issued proposing to demand interest of ₹ 6,46,150/- for the period 01.06.2008 to 30.09.2011. The original authority confirmed the demand of interest of ₹ 6,46,150/- and appropriated an amount of ₹ 5,638/- which was paid by the appellant assessee. On appeal, the Ld. Commissioner (Appeals) upheld the adjudication order and rejected the appeal. Hence the present appeal before the Tribunal. 2. Ld. Advocate appearing on behalf of the appellant submits that no service tax was paid in view of the legal uncertainty about the ta
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irecting predeposit by certain specified dates. It is the submission of Ld. Advocate that though the appellant herein was not a party to the interim order, the service tax due for the period 1.6.2008 to 30.9.2011, amounting to ₹ 21,43,717/- was paid in instalments and finally by 12.06.2012. Ld. Advocate further argued that the appellant was under the bonafide belief that they are not required to pay the service tax in view of the order of Hon ble Delhi High Court and subsequently pendency of appeals challenging the retrospective amendment to section 65(105)(zzzz) in 2010 before the Hon ble Supreme Court. Accordingly, he submitted that the demand is not sustainable on account of bonafide belief mentioned earlier and the extended period for demand of interest is not applicable. He relied upon various decisions in support of his submissions. 3. Ld. DR appearing on behalf of Revenue submits that the matter has been discussed in detail by both the authorities below and he made the Ben
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ter receiving the intimation on 18.6.2012, the department should have determined the interest payable and communicated to the assessee and if the assessee did not pay the same, they had one year period for issuance of show cause notice. In this case, without intimating to the assessee that he is liable to pay interest and they should pay the same, the Officers proceeded to issue show cause notice straightaway. Section 73(3) contemplates non issue of show cause notice in the event of an assessee paying full amount of service tax with interest. When the section and provisos are read together, in this case also, a letter should have been written to the assessee to pay interest and if they fail to pay the interest, show cause notice should have been issued. There is no evidence on record to show that any such letter was written by the Revenue. 6. As regards question of time bar, I find that the show cause notice in this case was issued on 24.08.2016 demanding interest for the period from 1
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