2014 (10) TMI 601 - AT - Service Tax

Denial of remission claim - adjustment of the excess service tax deposited - Authority rejected the claim for availing the benefit of this deposit on the ground that the assessee had filed only a photocopy of the internet banking challan dated 31-3-2008 without attestation - Held that - Adjustment claimed of the excess service tax remitted just about 9 months prior to the due date on which the service tax liability accrues cannot be rejected on the basis of conditions spelt out in Rule 6(4A) and (4B). If an excess amount of service tax has been remitted and within a reasonable period thereof adjustment of this excess amount deposited is sought in respect of a service tax liability arising in subsequent months, there cannot be appropriation of the excess service tax deposit. Of this prima facie premise, the relevant provisions of Rule 6 may perhaps have to be interpreted by directory and not mandatory. demand of ₹ 58,36,314/- relatable to services provided to M/s. HCL Infinite, it is incumbent upon the Adjudicating Authority to verify the records to ascertain whether the amount was deposited by internet banking, particularly when the assessee provides a copy of a challan purportedly in proof of such deposit. since an amount of nearly ₹ 89,00,000/- was deposited, either in respect of the taxable services provided to M/s. HCL Infinite or by way of excess remittance of service tax on 30th June, 2006, we find a strong prima facie case in favour of the assessee. Accordingly, we grant waiver of pre-deposit and stay all further proceedings for recovery of the assessed liability, during pendency of the appeal - Stay granted.

Summary

Issues:
Levy of service tax due to short remittance, education cess, penalty, adjustment of excess service tax remitted, deposit for services provided to a specific entity, rejection of claim for adjustment, verification of records for deposit confirmation, interpretation of Rule 6 provisions.

Analysis:
The judgment pertains to the confirmation of the levy of service tax and education cess, along with penalties, due to short remittance for a specific period. The proceedings were initiated based on a show cause notice leading to an adjudication order by the Commissioner (Adjudication), Service Tax, New Delhi. The order mentions a claim for the adjustment of excess service tax remitted earlier, as well as a deposit made for services provided to a particular entity. The Adjudicating Authority rejected the claim for adjustment citing non-compliance with Rule 6(4A) and (4B) provisions and lack of proper documentation for the deposit related to services provided to the entity.

The Tribunal, in its analysis, opined that the adjustment claimed for the excess service tax remitted should not be rejected solely based on the conditions specified in Rule 6(4A) and (4B). It emphasized that if an excess amount of service tax has been remitted and adjustment is sought within a reasonable period for a subsequent service tax liability, the excess amount cannot be appropriated. The Tribunal suggested a possible interpretation of Rule 6 as directory rather than mandatory in such cases.

Regarding the demand related to services provided to the specific entity, the Tribunal highlighted the necessity for the Adjudicating Authority to verify the records to confirm the deposit made through internet banking, especially when the assessee provides a copy of a challan as proof. Considering the circumstances where a significant amount was deposited, the Tribunal found a strong case in favor of the assessee. Consequently, the Tribunal granted a waiver of pre-deposit and stayed further proceedings for the recovery of the assessed liability during the appeal's pendency, thereby disposing of the stay petition.

In conclusion, the judgment addresses issues related to the adjustment of excess service tax, verification of deposit records, interpretation of Rule 6 provisions, and the overall assessment of the case leading to a favorable decision for the assessee.