2007 (3) TMI 70 - AT - Service Tax

Payment of Service tax - Revenue contended that the appellant is paid service tax to DOT not to the credit of the Central Government, so appellant not entitle for adjustment in terms of Rule 6(3) of STR,1944 - Held revenue contention is right

Summary

Issues:
- Appeal against Commissioner (Appeals) allowing suo motu adjustment of service tax.
- Interpretation of Rule 6(3) of Service Tax Rules regarding adjustment of service tax.
- Tribunal's decision on the revenue appeal against Order-in-Appeal No. 82/CE/CHD/2005.

Analysis:

1. The appeal was filed by the revenue against the impugned order where the Commissioner (Appeals) allowed the adjustment of service tax suo motu. The Commissioner (Appeals) based this decision on a previous Order No. 82/CE/CHD/2005 dated 28-2-2005. However, despite notice, no one appeared on behalf of the respondents, leading to the appeal being taken up for disposal.

2. The crux of the matter lies in the interpretation of Rule 6(3) of the Service Tax Rules. The Tribunal's decision in Final Order No. 129/2006-S.T., dated 9-1-2006, clarified the provision. The Tribunal emphasized that Rule 6(3) allows for the adjustment of service tax only when the tax has been paid by the assessee to the credit of the Central Government for a taxable service not provided by them, and the assessee has refunded both the value of the service and the tax to the recipients. In this case, the respondents had paid the service tax to the Department of Telecommunications (DOT) and not to the credit of the Central Government. Therefore, the respondents were not entitled to the adjustment under Rule 6(3) as they did not meet the conditions stipulated in the rule.

3. The Tribunal's decision in the revenue's appeal against Order-in-Appeal No. 82/CE/CHD/2005 was clear. The Tribunal set aside the impugned order that allowed the adjustment of service tax and held that the respondents were not entitled to such adjustment under Rule 6(3) of the Service Tax Rules. The Tribunal's decision was based on a strict interpretation of the rule and the specific circumstances of the case. Consequently, the appeal filed by the revenue was allowed, overturning the decision of the Commissioner (Appeals).

In conclusion, the Tribunal's interpretation of Rule 6(3) of the Service Tax Rules played a crucial role in deciding the appeal, emphasizing the importance of adhering to the specific conditions outlined in the rule for the adjustment of service tax.