2013 (11) TMI 1507 - AT - Service Tax

Suomotu refund of excess payment - waiver of Penalty under section 76 - Erection, Commissioning and Installation Service - Held that - liability admitted during a proceeding either at the adjudication stage or at the first appeal stage, cannot be agitated in further proceedings. Therefore, I hold that the appellant cannot get any refund of the payment made subsequently for the period Oct 10 to March 11 - there is payment in excess of the actual tax liability because of the wrong understanding of the service tax laws by the appellant and it is not proper to impose penalty in such circumstances where tax is already paid twice. Considering the facts and circumstances of the case, there is force in the submission of the appellant that there was reasonable cause for delay in payment of tax for the period Oct 10 to Mar 11. So I invoke the provisions of section 80 of the Act and waive the penalty imposed on the appellant. Thus the demand of tax along with interest is upheld and penalty imposed is set aside - Decided partly in favour of assessee.

Summary

Issues:
1. Excess payment of service tax for two different periods.
2. Permissibility of suo motu refund of excess payment.
3. Penalty imposition under section 76 of the Finance Act, 1994.
4. Admissibility of tax liability admission in further proceedings.
5. Invocation of section 80 of the Finance Act, 1994 for penalty waiver.

Issue 1: Excess payment of service tax for two different periods
The appellant paid service tax in excess of their tax liability for the periods Oct 09 to March 10 and Oct 10 to March 11 due to a mistake in calculating the assessable value of the service rendered. The excess payment made for the first period was adjusted towards the liability for the second period, resulting in a lesser amount paid than required for the second period. This led to a show cause notice from Revenue for recovery of the short payment of service tax liability for the second period.

Issue 2: Permissibility of suo motu refund of excess payment
The Revenue contended that the suo motu refund of excess payment taken by the appellant during the second period was not permissible under the Service Tax Rules and the Finance Act, 1994. The appellant argued that Rule 6(4A) allowed adjustment of excess service tax paid during one quarter in a succeeding quarter without specifying that it had to be in the immediately succeeding quarter. The appellant maintained that the adjustment made after two quarters was valid as the rule did not mandate immediate adjustment.

Issue 3: Penalty imposition under section 76 of the Finance Act, 1994
The Asst. Commissioner imposed a penalty under section 76 of the Finance Act, 1994, which was later modified by the Commissioner (Appeals) to a different rate. The appellant contested the penalty imposition, arguing that since they had already paid the service tax liability over and above the actual liability, penalty should not be imposed. The appellant sought the invocation of section 80 of the Finance Act, 1994 for penalty waiver.

Issue 4: Admissibility of tax liability admission in further proceedings
The Tribunal held that a liability admitted during a proceeding, either at the adjudication stage or at the first appeal stage, cannot be agitated in further proceedings. Therefore, the appellant was not eligible for a refund of the payment made subsequently for the second period.

Issue 5: Invocation of section 80 of the Finance Act, 1994 for penalty waiver
The Tribunal found that there was a reasonable cause for the delay in payment of tax for the second period due to the appellant's misunderstanding of the service tax laws. Consequently, the Tribunal invoked the provisions of section 80 of the Act and waived the penalty imposed on the appellant, upholding the demand for tax along with interest.

This judgment highlights the complexities involved in service tax assessments, adjustments, and penalty impositions, emphasizing the importance of adherence to tax laws and regulations to avoid unnecessary financial liabilities.