Taxpayer is liable to pay Interest on Service Tax Paid in Delayed Manner: CESTAT Upholds Rejection of Refund Claim

The Hyderabad bench of CESTAT upheld the rejection of a refund claim, affirming the taxpayer's liability to pay interest on delayed payment of service tax. The appellants provided taxable services including management consultancy and technical services, but failed to discharge service tax under the Reverse Charge Mechanism for services received from the CMMI Institute, USA. \r

Despite paying Rs. 2,72,700 on 24/09/2019 upon audit discovery, a show cause notice was issued demanding the same amount for 2016-17 to 2017-18, with interest and penalties. The appellant argued their delayed ST-3 Returns filing was due to awaiting CBIC notifications and sought exemption from interest under an Amnesty Scheme. \r

However, CESTAT found interest on service tax payment mandatory under tax provisions, rejecting the appellant's claims. The bench cited precedents and ruled against the appellant's eligibility for transitional credit, adhering to statutory provisions.