2023 (2) TMI 1311 - AT - Service Tax

Adjustment of excess Service Tax paid by the appellant is in accordance with Rule 6(3) of the Service Tax Rules, 1994 or not. The demand has been confirmed on the sole ground that the appellant is not eligible to make the adjustment of excess Service Tax paid by them as the appellant has not refunded the value of taxable service and Service Tax thereon to the end consumer as required under Rule 6(3) of the Service Tax Rules. HELD THAT - It has to be borne in mind that Rule 6(3) provides for an eventuality where tax has been collected and paid to the Government and no service was thereafter provided. In other words, if the service provider collects the consideration for services along with tax and thereafter, for some reason, is not able to provide the said service, can refund the consideration along with tax to the customer. The tax already paid to the Government can be adjusted towards the liability for the subsequent period. By such adjustment, the service provider-assessee need not take the route of refund of excess tax paid as provided under Section 11B of the Central Excise Act, 1944. The Hon'ble Apex Court in the case of M/s. Birla Corporation Ltd. 2005 (7) TMI 104 - SUPREME COURT has held that the Revenue cannot take a different stand when the Revenue has accepted the principles laid down in a previous case. The demand cannot sustain and requires to be set aside - Appeal allowed.

Summary

Issues Involved:
1. Adjustment of excess Service Tax paid u/s 6(3) of the Service Tax Rules, 1994.
2. Double payment of Service Tax by the appellant and their associate company.
3. Refund of value of taxable service and Service Tax to the end customer.

Summary:

Adjustment of Excess Service Tax Paid u/s 6(3):
The primary issue was whether the appellant, M/s. Aircel Ltd., could adjust the excess Service Tax of Rs. 2,19,36,614/- paid towards their subsequent Service Tax liability under Rule 6(3) of the Service Tax Rules, 1994. The appellant argued that they had paid Service Tax on recharge vouchers sold to dealers, which were later used by subscribers of their associate company, M/s. Aircel Cellular Ltd. (ACL). The Service Tax on these vouchers was paid by both companies, leading to excess payment by the appellant. The appellant adjusted this excess payment in their revised returns, which the Department contested, stating that the adjustment was not in accordance with Rule 6(3) as the refund was not made to the end customer but to ACL.

Double Payment of Service Tax:
The Tribunal noted that there was no dispute regarding the double payment of Service Tax by both the appellant and ACL. The appellant and ACL settled the amounts through credit notes. The Tribunal emphasized that the services were indeed provided to the subscribers, and the adjustment of amounts between the companies was to avoid unjust enrichment.

Refund of Value of Taxable Service and Service Tax to the End Customer:
The Tribunal discussed that Rule 6(3) allows adjustment of excess Service Tax paid if the value of taxable service and Service Tax is refunded to the person from whom it was received. The Tribunal held that the requirement of refund in Rule 6(3) is to prevent unjust enrichment, which was satisfied in this case as the amounts were adjusted between the appellant and ACL.

Conclusion:
The Tribunal concluded that the adjustment of excess Service Tax paid by the appellant was in accordance with Rule 6(3) of the Service Tax Rules, 1994. The Tribunal also noted that a similar issue in the case of ACL had attained finality, and the Department could not take a different stand. The demand was set aside, and the appeal was allowed with consequential reliefs.