2011 (2) TMI 840 - AT - Service Tax

Demand - Short payment of tax - No details are available as to the extent of short levy alleged by the department for the period from October 2005 to March 2006 and for the period from July, 2006 to September 2006 - Only over-view of the short-levy is given for the entire period of October 2005 to September 2006 - Decided in favour of the assessee by way of remand to original authority

Summary

Issues:
Short payment of service tax, incorrect adoption of tax rate, excess payment claimed by the assessee, lack of examination of excess payment claim, need for verification of tax rate, failure to provide specific details of short levy, non-compliance with Rule 6(4)(a) of Service Tax Rules, remand for fresh consideration.

Analysis:
The appeal before the Appellate Tribunal concerned a Show Cause Notice issued to the respondents for alleged short payment of service tax. The Notice claimed a shortfall of Rs. 56,861 in tax payment for a specific period. The assessee disputed this, arguing that the tax rate was incorrectly applied at 12% instead of 10% for a certain period, resulting in an excess demand of Rs. 25,642. Additionally, the assessee claimed to have overpaid Rs. 31,216 during a different period, seeking an adjustment. The original authority upheld the tax demand, but the Commissioner (Appeals) reversed this decision.

During the hearing, the Department acknowledged the lack of examination regarding the alleged excess payment of Rs. 31,216. The Department also agreed to verify the claim of the respondents regarding the adoption of a higher tax rate. The respondents, supported by their counsel, cited a Tribunal decision to argue that the tax rate should correspond to the date of service provision, even if payment occurred later at a higher rate. They emphasized the need for a detailed examination of the excess payment claim, which was not adequately addressed in the previous orders.

After reviewing the submissions and records, the Tribunal accepted the principle that the tax rate should align with the service provision date. However, it noted the absence of specific details on the alleged short levy for different periods and the failure to comply with Rule 6(4)(a) of the Service Tax Rules for adjusting excess payments. Consequently, the Tribunal set aside the previous orders and remanded the matter to the original authority for a fresh assessment. The respondents were instructed to provide necessary details within 45 days for a prompt reconsideration, ensuring a fair opportunity for a hearing.

This detailed analysis of the judgment highlights the key issues of tax payment discrepancies, rate adoption correctness, excess payment claims, and the procedural requirements for a thorough reconsideration by the original authority.