The Delhi Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has provided partial relief to a Chhindwara-based joint venture firm engaged in site formation, excavation, and demolition services, ruling that a major portion of the interest demand raised against it was unsustainable.
The bench of Dr. Rachna Gupta (Judicial Member) noted that Section 75 of the Finance Act, 1994 makes the payment of interest mandatory even for minor delays. After reviewing invoices and payment records, the Tribunal found that there were indeed short delays: six days for an invoice dated December 17, 2014, and two days for another dated December 21, 2015. Interest liability for these two instances was confirmed.
The case stemmed from an audit of the firm’s records for the financial year 2015–16, where tax officials observed two discrepancies: late filing of ST-3 returns without payment of the prescribed late fee of ₹32,400, and an alleged delay in tax payments leading to an interest demand of ₹2,57,814. A show cause notice issued in July 2019 culminated in a demand order, which was later upheld by the Commissioner (Appeals). The firm then approached the Tribunal.
The firm accepted liability for the late filing fee but contested the interest demand. Its counsel argued that, except for two entries, all service tax payments had been made on time. Errors in the ST-3 returns, specifically misreporting the quarter as October–December instead of January–March, were attributed to a clerical mistake by the accountant. The appellant relied on a series of judicial precedents to argue that the demand was unsustainable and barred by limitation.
The department countered that the ST-3 returns themselves were the basis of the investigation, and since they reflected delayed payments, the interest demand was valid.
The Tribunal accepted the appellant’s claim that the errors were typographical. Payments corresponding to January–March 2015 invoices had been wrongly shown under October–December 2014 in the returns. Since the payments were actually made within time, the interest demand for these invoices was quashed.
The Tribunal upheld the late filing fee of Rs. 32,400 and confirmed interest liability only for two specific invoices, while setting aside the rest of the Rs. 2.57 lakh demand. The appeal was thus partly allowed.
Case Details
Case Title: M/s AKC & SIG Versus Commissioner of CGST And Central Excise, Jabalpur
Case No.: Service Tax Appeal No. 55444 of 2023
Date: 15/09/2025
Counsel For Appellant: J. Kainaat, Advocate
Counsel For Respondent: Kuldeep Rawat
Read More: Unsigned GST Penalty Order Without DIN Declared Invalid: Andhra Pradesh High Court
