2013 (11) TMI 1407 - AT - Service Tax

Service tax liability - Adjustment of excess duty paid - Rule 6(4A) & (4B) of Service Tax Rules, 1994 - Penalty u/s 76 - Held that - any excess amount of Service Tax required to be paid by the appellant should be adjusted from the excess duty paid in the subsequent period as outlined in Rule 6 (4A). However, the adjustment mentioned above are subject to the conditions specified under Rule 6 (4B) which, inter alia, according to which any amount in excess of specified amount cannot be adjusted by the appellant. The second condition is that such an adjustment should be intimated to the jurisdictional Central Excise officer within a period of 15 days from the date of such adjustment. The amount adjusted by the appellant was more than the amount specified in the Rule and no intimation was given to the jurisdictional Central Excise officer - Under Rule 6(3), there are no conditions like the value limit to be adjusted or regarding giving intimation of the adjustment to the jurisdictional Central Excise officer. Appellant had a bonafide belief that the entire amount of Service Tax payable can be adjusted against excess Service Tax paid, therefore, it is a fit case where the provisions of Section 80 of Finance Act, 1994 can be made applicable. Accordingly, penalties imposed upon the appellant under Section 76 of Finance Act, 1994 are set aside - Decided partly in favour of assessee.

Summary

Issues:
Adjustment of excess Service Tax paid, Interpretation of Rule 6(4A) and (4B) of Service Tax Rules, 1994, Compliance with statutory conditions for adjustment, Applicability of case laws on adjustment, Imposition of penalty under Section 76 of Finance Act, 1994.

Analysis:
1. The appeal concerned the appellant's adjustment of excess Service Tax paid during a specific period against Service Tax liability for another period, contrary to the provisions of Rule 6(4A) and (4B) of the Service Tax Rules, 1994. The Revenue contended that only a limited amount could be adjusted as per the rules.

2. The appellant, represented by a Chartered Accountant, argued that despite the specified amount for adjustment in the rules, case laws supported their position. They claimed a bonafide belief in their actions and cited various judgments to justify their adjustment.

3. The Revenue, represented by an Authorized Representative, relied on legal precedents emphasizing strict compliance with statutory provisions. They cited the Supreme Court's judgment in CCE New Delhi Vs. Hari Chand Shri Gopal, highlighting the need for precise adherence to exemption conditions.

4. The Tribunal analyzed Rule 6(4A) and (4B) of the Service Tax Rules, 1994, which outlined the conditions for adjusting excess Service Tax payments. It noted that the appellant's actions did not align with the specified limits and notification requirements under the rules.

5. The Tribunal observed that the case laws referenced by the appellant pertained to different rule provisions without similar conditions as Rule 6(4A) and (4B). Therefore, those judgments were deemed inapplicable to the current scenario.

6. Citing the Supreme Court's directive on strict interpretation of exemption provisions, the Tribunal upheld that the adjustment limit was restricted to Rs.1 lakh as per Rule 6(4B) and required intimation to the Central Excise officer, as mandated by the rules.

7. Regarding the penalty imposed on the appellant under Section 76 of the Finance Act, 1994, the Tribunal considered the appellant's genuine belief in their actions and applied Section 80 to set aside the penalties, acknowledging the lack of intent to evade payment.

8. Ultimately, the Tribunal allowed the appeal only to the extent of setting aside the penalties imposed, while affirming the statutory limits and notification requirements for adjusting excess Service Tax payments under Rule 6(4A) and (4B) of the Service Tax Rules, 1994.