2012 (10) TMI 726 - AT - Service Tax

Non payment of Service Tax - assessee claimed adjustment of amount paid in excess towards short payment - man power recruitment/supply agency services - demand of penalty u/s 76 - Held that - Considering the Order of Commissioner in the case of M/s Jani (appellant assessee) Commissioner had allowed the adjustment of demand of Service Tax and interest thereon for the year 2005-2006 from the excess amount paid by them for the year 2006-2007. Otherwise, there is no need for mentioning the amount excess paid in the order portion if he has not allowed the adjustment of amount. Thus in the absence of any specific observation not allowing the adjustment, the obvious conclusion appears to be that the excess payment has been adjusted towards short payment and since the amount excess paid is more than ₹ 2 lakhs and the same happened in the very next year, the penalties that are imposed under Section 77, 78 and interest, can be said to have been adjusted in excess payment made by the appellant. Under these circumstances, there is no case for any further demand. Penalty under Section 76 of Finance Act, 1994 also cannot be imposed since the amount paid by the appellant is sufficient towards Service Tax liability. In the case of M/s Vishal (second appellant assessee), the Commissioner has totally ignored the excess payment in next two years and has considered only short payment. In the light of the fact that the facts in both the cases are same and the orders have been passed on the same day, differential treatment between the two appellants, in similar circumstances, cannot be sustained. Accordingly, by following the principles in the case of M/s Jani, the appeal filed by M/s Vishal is also to be allowed and for the same reason - appeal decided against revenue

Summary

Issues:
Appeals against demand and penalty imposition for incorrect Service Tax payment during 2005-2008.

Analysis:
The judgment involves four appeals arising from two impugned orders related to incorrect Service Tax payment by two man power recruitment/supply agencies during 2005-2008. Both units contested the quantification, leading to the Commissioner passing impugned orders based on reports from Assistant Commissioner and range Superintendent. The main issue revolved around the correct quantification of Service Tax liabilities and penalties imposed. The first appellant, M/s Vishal, was found to have underpaid in 2005-2006 but overpaid in subsequent years. The Commissioner upheld the demand for the underpayment, ignoring the excess payments made later. The second appellant, M/s Jani, had a similar situation with underpayment in 2005-2006 and overpayment in 2006-2007. However, the Commissioner's order seemed ambiguous regarding the adjustment of excess payments towards underpayment.

The legal representatives presented contrasting arguments. The appellant's counsel argued that since there were no dues, no penalty should be imposed, except possibly under Section 77 of the Finance Act, 1994. On the other hand, the Revenue's representative contended that excess payments should be claimed through a refund process, and penalties under Sections 76, 77, and 78 were justified due to underpayments during the relevant period. The Tribunal analyzed the submissions and the Commissioner's orders.

In the case of M/s Jani, the Tribunal observed that the Commissioner's order lacked clarity regarding the adjustment of excess payments. Since there was no appeal against this ambiguity, the Tribunal concluded that the excess payment was likely adjusted towards the underpayment, leading to no further demand. The Tribunal held that penalties and interest were effectively adjusted through the excess payment. The appellant undertook not to claim a refund. This situation fell under Section 73 of the Finance Act, 1994, and hence no penalty under Section 76 was justified.

Regarding M/s Vishal, the Tribunal noted that the Commissioner had disregarded the excess payments in subsequent years and only considered the underpayment. Given the identical circumstances of both cases and the differential treatment by the Commissioner, the Tribunal decided to allow M/s Vishal's appeal based on the principles applied in M/s Jani's case. Consequently, the appeals by M/s Vishal and M/s Jani were allowed, while the appeals by the Revenue were rejected.