2017 (5) TMI 1758 - AT - Service Tax

Benefit of self-adjustment of the demand of service tax against the refund admissible to the appellant - excess paid service tax - HELD THAT - It appears that matter is covered by the Tribunal s decision in case of DELL INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE 2015 (12) TMI 1555 - CESTAT BANGALORE , where Tribunal has inter alia observed that if excess payment of tax in a month is not on account of reasons involving interpretation of law, taxability, classification, valuation or applicability of exemption notification and is purely on account of inability of the assessee to exactly determine the total amount collected during the month against the bills raised as a result of which he had determined his tax liability on estimation basis, the excess amount of tax paid during the month can be adjusted against his tax liability during other months and in this regard, there cannot be any monetary limit. There is no merit in the appeal filed by the Revenue - Appeal dismissed.

Issues:
1. Benefit of self-adjustment of service tax against refund
2. Interpretation of Service Tax Rules, 1994
3. Legal validity of adjustment of excess service tax paid
4. Precedents regarding adjustment of excess tax payment

Analysis:

Issue 1: Benefit of self-adjustment of service tax against refund
The appeal was filed by the Revenue against an Order in Appeal where the appellant was allowed the benefit of self-adjustment of the demand of service tax against the refund admissible for the excess payment of service tax made. Both sides were represented by the Ld. DR for the revenue and Ld. Advocates for the respondent. The Tribunal considered the facts and submissions of both parties and referred to the decision in the case of Dell India Private Limited Vs Commissioner Service Tax Bangalore. It was noted that the law of the land under Article 265 of the Constitution of India prohibits the levy or collection of tax except by authority of law. The Tribunal emphasized the need for a liberal interpretation of the Service Tax Rules, 1994 to allow the adjustment of excess service tax paid by the appellant against their tax liability during the later period.

Issue 2: Interpretation of Service Tax Rules, 1994
The Tribunal analyzed the combined effect of various provisions of the Service Tax Rules, 1994, specifically Rule 6(4A) and Rule 6(4B). These rules apply when an assessee, due to an inability to correctly determine the amount received for services provided, pays service tax based on estimation. The excess amount paid is considered an advance payment of tax that can be adjusted against the service tax liability for other months. The Tribunal highlighted that there is no condition requiring centralized registration for availing the adjustment facility. It was emphasized that when an assessee pays tax in excess of the actual liability for reasons other than legal interpretation, the Government cannot retain the excess tax without allowing adjustment, as it would amount to collection of tax without authority of law.

Issue 3: Legal validity of adjustment of excess service tax paid
The Tribunal referred to a decision of CESTAT, New Delhi in the case of General Manager (CMTS) v. CCE, Chandigarh, where it was held that failure to opt for centralized registration under Rule 4(2) of the Service Tax Rules, 1994 does not prevent the adjustment of excess service tax payment against tax liability during other months. The Tribunal emphasized that if the excess payment is not due to legal interpretation issues but to the inability of the assessee to determine the total amount collected accurately, it can be adjusted against tax liability for other months.

Issue 4: Precedents regarding adjustment of excess tax payment
The Tribunal cited the decision in the case of GM, Telecom, BSNL Vs. CCE, Raipur, where it was held that substantial benefit cannot be denied in cases where some procedural aspects were not followed, as long as there was no mala fide intent. The Tribunal concluded that there was no merit in the appeal filed by the Revenue, and the impugned order allowing the adjustment of excess service tax paid was sustained. The appeal was dismissed as without merits.

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