2017 (6) TMI 769 - AT - Service Tax

Adjustment of excess and short paid amounts - whether the adjustment made by the appellant on the excess payments made by them under the provisions of Rule 6 of the Service Tax Rules for payments of service tax a liability that arose subsequently? - Held that - the appellant had taken centralized registration and have been paying service tax every month on the basis of provisional determination of liability. Subsequently the correct liability has been reflected in the relevant ST 3 returns. If the excess amounts of service tax are taken into account there may not be any demand for service tax - reliance placed in the case of CCE Bhopal vs. Telecom District Manager BSNL 2017 (4) TMI 386 - CESTAT NEW DELHI where on similar issue it was held that the adjustment of the excess credit paid during the previous period is allowed as was also allowed in the appellant s own case during the previous period - appellant will be entitled to adjustment of excess and short paid cenvat credit and will be liable to pay the service tax only to the extent of net demand if any - For the purpose of verification and determining the net service tax payable if any the matter is remanded to the original adjudicating authority. CENVAT credit - disallowance of CENVAT credit on the ground that the credits have been availed in the absence of details of inputs service providers as well as the number and date of the document - scope of SCN - Held that - it was not open to the adjudicating authority to travel beyond the allegations made in the show-cause notice to deny the credit based on an altogether new ground. As such the impugned order was held to be liable to be set aside on this ground itself. The impugned orders are set aside and matter remanded to the adjudicating authority for denovo decision - appeal allowed by way of remand.

Summary

Issues:
1. Short payment of service tax under banking and financial services and business auxiliary services.
2. Demand for payment of interest for delayed service tax payment.
3. Alleged irregular availment of cenvat credit.

Short Payment of Service Tax:
The appellant, engaged in banking and financial services, faced allegations of short payment of service tax during specific periods. The Commissioner confirmed the demand for service tax and interest in the original order, which was later modified in a subsequent order. The appellant argued that excess payments in some months were adjusted against short payments in others, resulting in no net short payment. Citing relevant case laws, the appellant contended that such adjustments were permissible even before the introduction of Rule 6(4A) of the Service Tax Rules, 1994. The Tribunal, considering the appellant's submissions and case laws, held that excess and short paid amounts could be adjusted, remanding the matter for verification of net service tax payable.

Demand for Payment of Interest:
The appellant did not contest the demand for interest on delayed service tax payments. The Tribunal upheld the demand for interest, as the appellant did not dispute this aspect.

Irregular Availment of Cenvat Credit:
Regarding the alleged irregular availment of cenvat credit, the appellant argued that they possessed relevant invoices but faced challenges in producing them due to the dispersed nature of documents across branches. The adjudicating authority, however, disallowed a part of the credit beyond the show cause notice's scope. The Tribunal noted that similar credits were allowed for subsequent periods by the Tribunal in a previous order. Referring to relevant case laws and court decisions, the Tribunal concluded that denial of credit for disputed services, which were used in relation to the business, was not justified. The matter was remanded to the adjudicating authority for a fresh decision, emphasizing adherence to principles of natural justice and restricting consideration to issues raised in the show cause notice.

In conclusion, the Tribunal set aside the impugned orders and remanded the matter to the adjudicating authority for a denovo decision. The Tribunal's decision, pronounced on 15.06.2017, addressed the issues of short payment of service tax, demand for interest payment, and irregular availment of cenvat credit comprehensively, ensuring a fair and just resolution based on legal principles and precedents.