2014 (6) TMI 862 - AT - Service Tax

Adjustment of shortfall of tax with excess payment of service tax - demand based on difference ST-3 return - Demand of service tax u/s 11D - Enhancement in rate of tax - Held that - The appellant s plea is that there was excess payment to the extent of about Rs.13 lakhs during October, 2003 and if this excess amount is taken into account, there would not be any demand against them under Section 11D. The appellant s counsel has vehemently pleaded that they have documents to prove that the entire amount collected from the customers as service tax during the period from October, 2002 to September, 2003 was paid to the Government. Since this is a matter of reconciliation, the same can only be done by the original adjudicating authority for which this matter would have to be remanded. - matter remanded back. Difference in ST-3 return - Held that - The appellant s contention is that the value of taxable service declared in the ST-3 returns also includes the charges received from other telecom service providers for interconnection on which no service tax is payable in terms of the Board s Circular No.91/2/07/ST dated 13.12.2000 - matter remanded back for verification. Demand due to enhancement in tax rates - rate of service tax had been enhanced from the earlier 5% to 8% Adv. w.e.f. 14.05.2003 - Held that - the service tax has been charged at the enhanced rate on the entire amount received during the month of May, 2003, which may be for the period prior to 14.05.2003. In view of this, this demand is also not sustainable and would have to be remanded to the original adjudicating authority for requantification, keeping in mind the principle that the enhanced rate of 8% Adv. effective from 14.05.2003 would be applicable only to the amount received for the taxable services provided w.e.f. 14.05.2003 and the enhanced rate would not be applicable for the amounts received, even if after 14.05.2003, for the services provided prior to 14.5.2003 - matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Service tax demand under Section 11D for the period from October 2000 to September 2003.
2. Service tax demand based on the value of taxable service declared in ST-3 returns for the period from October 2000 to September 2003.
3. Service tax demand for May 2003 at an enhanced rate of 8%.

Analysis:
1. The service tax demand of Rs.11,84,509/- under Section 11D was confirmed by the Commissioner due to the appellant's alleged non-payment of collected service tax amounting to Rs.11,84,509/-. The appellant argued that excess payment in October 2003 should offset this demand. The Tribunal found discrepancies and remanded the matter for reconciliation by the original adjudicating authority.

2. The service tax demand of Rs.1,13,71,466/- for the period from October 2000 to September 2003 was based on the variance between the service tax payable as per ST-3 returns and the actual service tax deposited. The appellant contended that certain charges were exempt from service tax as per relevant circulars and notifications, which the Commissioner did not consider. The Tribunal remanded this issue for fresh adjudication by the Commissioner.

3. The service tax demand of Rs.30,33,060 for May 2003 was challenged by the appellant as the enhanced rate of 8% was incorrectly applied to the entire amount received in May 2003, including services provided before the rate increase. The Tribunal held that the enhanced rate should only apply to services provided after the rate change and remanded the matter for recalculation by the original adjudicating authority.

In conclusion, the Tribunal set aside the impugned order and remanded all issues to the Commissioner for fresh adjudication in accordance with the observations made in the Tribunal's order.