2011 (1) TMI 864 - AT - Service Tax

Demand of service tax based on reconciliation statement - The differences between CAC and computer accounts SLR are different and are reconciled. The service tax was paid and returns filed on the basis of the CAC figures - there were excess payments and in some months there were short payments and they had adjusted both and whatever differential amount was available has been paid by them - Even though the learned advocate submitted that there are decisions of the Tribunal holding that such adjustment can be allowed and extended period cannot be invoked in such cases - keeping in view that the appellant is a Public Sector Undertaking of Govt. of India and cannot be attributed malafide intention to evade payment of duty and by taking note of earlier decisions of the Tribunal in the same appellant s cases - Appeal is disposed off

Summary

Issues:
1. Short payment of Service Tax due to discrepancies between Cash Account Current (CAC) and Sub Ledger Revenue (SLR).
2. Allowability of adjusting excess payments against short payments.
3. Invocation of extended period for duty demand and penalty imposition.

Issue 1: Short payment of Service Tax due to discrepancies between CAC and SLR
The appellant, a provider of telephone services, maintained an accounting system where cash received at counters was collected by accounts officers and recorded in a cash book under different heads of account. Monthly, a Cash Account Current (CAC) summary was sent to the Telecom District Accounts office for consolidation. A separate accounting by the computer section prepared a Sub Ledger Revenue (SLR) statement based on revenue receipts. Discrepancies between CAC and SLR led to a show cause notice alleging short payment of Service Tax. The adjudicating authority confirmed the demand, stating that actual payments received were not reflected in the service tax paid. The appellant argued that due to lack of full details before the due date, they paid an estimated amount, resulting in excess and short payments. The Tribunal noted the appellant's working, a Public Sector Undertaking, and remanded the matter to allow excess paid adjustment against short payment, quantifying the balance duty with interest.

Issue 2: Allowability of adjusting excess payments against short payments
The appellant contended that excess payments should be allowed to adjust against short payments. The department disagreed, stating excess amounts cannot be offset against shortfalls. The appellant cited Tribunal decisions supporting such adjustments and argued against the imposition of penalty. The Tribunal, considering the appellant's status as a Public Sector Undertaking and absence of malicious intent, set aside the penalty, allowing the adjustment of excess payments against shortfalls.

Issue 3: Invocation of extended period for duty demand and penalty imposition
The department invoked the extended period for duty demand and imposed penalties due to discrepancies in service tax payments. The appellant argued against the extended period invocation, citing Tribunal decisions supporting adjustments between excess and short payments. The Tribunal, recognizing the appellant's working and previous Tribunal decisions, set aside the penalty, emphasizing the absence of malicious intent and remanding the matter to the adjudicating authority for quantifying the balance duty with interest.

In conclusion, the Tribunal's judgment addressed the discrepancies in service tax payments, allowing adjustments between excess and short payments for the appellant, a Public Sector Undertaking. The penalty was set aside due to the absence of malicious intent, and the matter was remanded for quantifying the balance duty with interest.