2013 (11) TMI 348 - AT - Service Tax

Adjustment excess tax paid under Rule 6(3) - Stay application - Subsequently, they recognized that actual telephone service was being provided by M/s. Aircel Cellular Limited, and they were also paying service tax on the same service. So the applicant paid the consideration along with service tax to M/s. Aircel Cellular Limited, by way of credit notes. However, they adjusted the excess payment made in by them to government against tax due for subsequent months in terms of Rule 6 (3) of Service Tax Rules, 1994. - Held that - Prima facie, we are of the view that there is no loss of revenue involved in this particular case. Since in a similar matter, the Tribunal has already remanded the case to the lower authority for de-novo adjudication it is proper that this appeal is admitted without any pre-deposit. It is so ordered. Further there shall be stay on collection of such dues during pendency of the appeal - Stay granted.

Summary

Issues:
1. Interpretation of Rule 6(3) of Service Tax Rules, 1994 regarding adjustment of service tax.
2. Permissibility of adjustment of excess payment against tax due for subsequent months.
3. Revenue loss due to non-compliance with Rule 6(3).
4. Admissibility of appeal without pre-deposit of dues.

Analysis:
1. The case involved the interpretation of Rule 6(3) of Service Tax Rules, 1994, regarding the adjustment of service tax. The applicant, providing mobile telephone services, had collected service tax on recharge coupons sold to customers roaming in their assigned area. However, the actual service was provided by another company. The applicant paid consideration along with service tax to the service provider and adjusted the excess payment against tax due for subsequent months. The revenue contended that Rule 6(3) only allows adjustment if service tax is refunded to the person from whom tax was collected, which did not occur in this case.

2. The revenue argued that the adjustment made by the applicant was not permissible under Rule 6(3) as no refund was made to the person from whom tax was collected. An amount was demanded for recovery of the adjusted credit during a specific period. The applicant defended that there was no revenue loss as the service tax collected was remitted to the Government. They highlighted minor non-compliance with Rule 6(3) and cited a similar case involving the other company where adjustments were accepted by the Department.

3. The Tribunal considered both sides' submissions and observed that there was no revenue loss in the case. Referring to a similar matter where the Tribunal had remanded the case for re-adjudication, it was deemed proper to admit the appeal without pre-deposit. The Tribunal ordered a stay on the collection of dues during the appeal's pendency, indicating a favorable view towards the applicant's argument regarding the adjustment of excess payment against tax due for subsequent months.

This detailed analysis covers the issues of interpretation of Rule 6(3), permissibility of adjustment, revenue loss considerations, and the admissibility of the appeal without pre-deposit, as addressed in the judgment by the Appellate Tribunal CESTAT CHENNAI.