The main legal point established in the judgment is that the calculation of interest for service tax liability should be based on whether the tax was specifically collected from the service recipients, and the applicable rate as per the relevant notification.

JUDGMENT

Sant Parkash, J. - This writ petition has been preferred under Article 226/227 of the Constitution of India for issuance of a writ in the nature of certiorari for quashing/modification of order dated 06.08.2020 (Annexure P-7) passed by Settlement Commission, to the extent of demand of interest in accordance with Notification No.13/2016-ST dated 01.03.2016.

2. The petitioner-Firm is engaged in rendering services of 'supply of manpower'. The respondents initiated an investigation against the petitioner alleging for not disclosing correct value of services rendered by it and collected various documents including balance sheet, Form 26AS and recorded different statements of proprietor of the petitioner-firm. On the basis of comparison of balance sheets for the years 2011-12 to 2014-15, Form 26AS with periodical ST-3 returns, respondents found a shortfall in value declared in ST-3 returns which resulted into short payment of service tax to the tune of Rs.72,65,808. Accordingly, respondents served upon the petitioner a show cause notice dated 24.10.2016 raising demand of Rs.72,65,808/- alongwith interest and penalty for the period 2010-11 to 2014-15. On 21.03.2017, the petitioner filed an application before Customs & Central Excise Settlement Commission, New Delhi to settle its duty liability, which was disposed of vide order dated 28.12.2017 (Annexure P-1) by the Settlement Commission holding that benefit of cum-tax benefit on the basis of sample invoices could not be allowed.

3. The petitioner preferred Civil Writ Petition No.1502 of 2018. This Court vide order dated 03.10.2019 (Annexure P-2) modified the order of Settlement Commission and directed the respondents to calculate liability of the petitioner after granting benefit of cum-tax value, whereafter the respondents recalculated the service tax payable after granting the benefit of cum-tax value to be Rs.55,70,843/- which had already been deposited by the petitioner between 22.08.2016 to 07.01.2017. The respondents relying upon Notification No.13/2016-ST dated 01.03.2016 (Annexure P-5) recalculated the interest liability of petitioner to the tune of Rs.48,33,258/- at the rate of 24%, instead of Rs.24,94,048/- as calculated by the petitioner. The petitioner filed written submissions dated 24.07.2010 (Annexure P-6) before the Settlement Commission pointing out the discrepancies in the interest calculation made by respondent No.2. The petitioner pleaded that interest has been charged @ 24% relying upon the aforesaid notification whereas interest should have been calculated @ 15% as the petitioner did not specifically collect the tax from the service recipients. Thereafter, vide order dated 06.08.2020 (Annexure P-7), respondents settled the service tax liability at Rs.55,70,843/-, rejecting the contentions of petitioner with regard to rate of interest to be charged.

4. Pursuant to notice of motion, reply dated 12.01.2021 has been filed on behalf of respondent No.2 submitting therein that pursuant to order dated 03.10.2019 passed by this Court, the liability was to be calculated within two months of receipt of order by granting benefit of cum-tax value. The Central Government vide Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020 (No.38 of 2020) dated 29.09.2020 has extended the time limit upto 31.12.2020. The answering respondent vide letter dated 14.07.2020 informed the petitioner about the calculation of interest liability and asked it to deposit the same. As per Rule 6(1) of Service Tax Rules, 1994, the payment of service tax in case of individuals or proprietary concerns and partnership firm, service tax is to be paid on quarterly basis. The due date for payment of service tax is 5th of the month immediately following the respective quarter. For this purpose, quarters are: April to June, July to September, October to December and January to March. For the last quarter i.e. January to March, payment is required to be made by 31st of March itself. As per