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Service tax audit

Srinivasa (PRACTICE)     26 November 2013

 38 points

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Dear Collegues,


Good morning. During the service tax audit of one of my client, the audit team has raised demand for non payment of service tax liability and the client has paid the full service tax demanded by the audit team. Now they are insisting for the interest amount. I have the following queries int his regard:

1. Whether the excess excise duty paid by assessee can be adjusted against the service tax interest payment?

2. The assessee has excess service tax input during the year 2012-2013 whether that can be adjusted against the interest amount and paid the remaining balance??

The assessee has financial difficulties and service tax department is calling and telling the client that if you dont pay the interest amount we will issue a show cause notice. Actually the client has excess input credit which almost covers the service tax interest amount which they are not agreeing for set off against the interest amount

can anyone advice please with some case laws.


Thanking you




Saurabh Maheshwari (B.com,ACA)     26 November 2013

Saurabh Maheshwari
B.com ACA 
 567 likes  5908 points

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As per combined reading of Rule 3(4) and 3(7) it can be concluded that no Cenvat credit can be used to pay any interest/penalty/late fee etc.....so such interest to be paid only and only in cash....


CA VIRAL SANGHVI (Finance head)     26 November 2013

Finance head 
 40 likes  681 points

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Interest should be paid in cash only. so you can not adjust Cenvat credit or Excise duty.

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