The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench ruled that the Government can not retain interest paid on service tax which is refundable. The appellants, Shanti Construction Co have provided works contract service to various Government Departments. The appellant have also availed the input services in the nature of works contract service from various sub- contractors as well on which the sub contractor have discharged the service tax and same was availed as Cenvat credit by the appellants. The said Cenvat credit was utilised for discharging the service tax liability by the appellant. During the period the appellants paid the total service tax of Rs 2,78,07,833/- on their works contract service. Out of the sum of Rs 2,78,07,833/- the appellants discharged the service tax by utilizing the Cenvat credit of Rs 1,82,16,059/- of service tax paid to their sub contractors.
Source Taxscan
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