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March 2015

2015 (37) STR 238 (Tri.-Mum.) Commissioner of Service Tax, Mumbai vs. Toyo Engineering Corporation Ltd.

By Puloma Dalal, Jayesh Gogri, Mandar telang Chartered Accountants
Reading Time 1 mins
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Interest to accrue till the date of debit in CENVAT Credit Account notwithstanding balance lying in CENVAT Credit Account on due date.

Facts:
The respondents discharged service tax liability by way of utilisation of CENVAT Credit. However, debit in CENVAT Credit account was done belatedly. The department demanded interest for the period of delay vide section 75 of the Finance Act, 1994 from the due date for payment of tax to the actual payment of tax i.e. till the date of debit in CENVAT Credit Account. It was argued that there was sufficient balance in CENVAT Credit Account and only debit entry was passed belatedly. Accordingly, interest liability should not arise.

Held:
It was held that tax can be paid either in cash or by debiting in CENVAT Credit account or by both. If the tax is paid through CENVAT Credit, the date of debit in the CENVAT account should be considered to be the date of payment. Therefore, interest arises from the due date of payment of tax to the actual date of payment, i.e., the date of debit in CENVAT Credit Account in the present case.

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