2017 (7) TMI 171 - AT - Service Tax

Wrong payment of duty - Self adjustment of service tax - Rule 6(4A) and 6(4B) of the Service Tax Rules - demand has been confirmed solely on the ground that the adjustment under Rule 6(4B)(ii) cannot be done after the month/ quarter immediately succeeding the month or quarter the mistake happened - Held that - similar issue decided in the case of M/s. Jubilant Organosys Ltd. Versus CCE, Meerut-II 2014 (10) TMI 138 - CESTAT NEW DELHI , where it was held that adjustment of service tax paid in excess in certain months towards the service tax liability of the subsequent months cannot be denied on such technical grounds - there is no question regarding double payment of service tax. In these circumstances, the grounds on which demand has been raised become procedural grounds - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Adjustment of wrong payment of duty in violation of Rule 6(4A) and 6(4B) of the Service Tax Rules.

Analysis:
The judgment by the Appellate Tribunal CESTAT MUMBAI involved the confirmation of demand against Larsen & Toubro Ltd. for adjusting wrong payment of duty in violation of Rule 6(4A) and 6(4B) of the Service Tax Rules. The appellant argued that they are a centrally registered unit, but their hydro carbon business branch in Rajasthan is not part of the centralised registration for services. They paid service tax in Rajasthan for certain services and later realized that the Rajasthan unit also paid the same service tax liability. The excess tax paid was adjusted against the liability of April 2009 after 11 months, which was contested by the respondent. The Rule prescribed that such adjustment should be made in the succeeding month or quarter, which was not followed in this case. The appellant relied on past judgments to support their argument for condonation due to procedural lapses. The Tribunal noted that there was no dispute regarding the double payment of service tax, and the demand was based on procedural grounds related to the timing of the adjustment.

The Tribunal considered the judgment of Jubilant Organosys Ltd. where relief was granted in a similar case, emphasizing that the adjustment of excess service tax paid in certain months towards subsequent months' liability should not be denied on technical grounds. The Tribunal highlighted that the issue had been settled in favor of the appellants based on previous judicial pronouncements. In this case, since there was no double payment of service tax, the grounds for the demand were deemed procedural. Relying on the decision of Jubilant Organosys Ltd., the Tribunal allowed the appeal, emphasizing that the demand was raised on procedural grounds and not due to double payment of service tax. The appeal was allowed based on the settled issue and relevant legal precedents.

In conclusion, the Appellate Tribunal CESTAT MUMBAI ruled in favor of the appellant, allowing the appeal based on the settled issue and past judicial pronouncements regarding the adjustment of excess service tax paid towards subsequent liabilities. The judgment emphasized that procedural grounds should not be used to deny such adjustments when there is no question of double payment of service tax. The decision highlighted the importance of following the prescribed rules for adjustments while considering the practical aspects of tax liability settlements.