2018 (4) TMI 1500 - AT - Service Tax

Adjustment of the Service Tax paid in excess - Rule 6(3) of Service Tax Rules, 1994 - denial on the ground that the said adjustment does not fall within the ambit of Rule 6(4B) of Service Tax Rules - Held that - there is no dispute as to the fact that the amount of amount of ₹ 2,71,84,170/- has been paid in excess, adjustment thereof is possible under provisions of Rule 6 of the Service Tax Rules. Similar issue came up before the Tribunal in the case of Central Mine Planning and Design Institute 2014 (7) TMI 830 - CESTAT NEW DELHI , wherein the Bench recorded that Rule 6(3) is applicable not only to the case of excess payment of service which can be made good in subsequent period and but also to the case where taxable values are not ascertainable for longer period. It was also held that sub-rule 6(3) is not dependent on provision of sub-rule 6(4). Appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of adjustment of Service Tax paid in excess under Rule 6(3) of Service Tax Rules, 1994.

Analysis:
The appeal challenged the Order-in-Original passed by the Commissioner of Central Excise & Service Tax, Raigad, regarding the denial of adjustment of excess Service Tax paid. The appellant sought adjustment under Rule 6(3) of Service Tax Rules, 1994 for the period April to September, 2011 and October, 2011 to March, 2012. The appellant had initially paid the excess amount but later issued credit notes due to rebates, claiming an adjustment of ?2,71,94,170. The lower authorities issued a demand show-cause notice, contending that the adjustment did not fall within Rule 6(4B) and that revised returns were not filed. The adjudicating authority rejected the contentions, confirming the demands with penalties and interest.

The appellant argued that the excess amount was paid and recorded in financial accounts, disputing the adjudicating authority's interpretation of Rule 6(3). The appellant cited Tribunal decisions in similar cases, emphasizing the possibility of suo motu adjustment of excess Service Tax paid under Rule 6(3), 6(4A), 6(4B), and 6(1A) of Service Tax Rules, 1994. The respondent contended that the appellant misinterpreted Rule 6, highlighting that canceled invoices did not negate collection from service recipients.

Upon review, the Tribunal found that the appellant had indeed paid an excess amount of Service Tax, which was not payable, and made a suo motu adjustment in subsequent returns. Citing precedents, the Tribunal emphasized that Rule 6(3) allowed adjustment of excess Service Tax paid against subsequent tax liabilities, without any time limit for adjustment. The Tribunal also referenced a judgment involving Dell India Pvt. Ltd., where a liberal interpretation of Rule 6 provisions favored the adjustment of excess payments. The Tribunal concluded that the impugned order was unsustainable, setting it aside and allowing the appeal.

The Tribunal's detailed analysis of Rule 6 provisions, including Rule 6(3), 6(4A), 6(4B), and 6(1A) of Service Tax Rules, 1994, showcased a consistent approach towards allowing adjustment of excess Service Tax paid by assessees. The judgments referred to highlighted the importance of a holistic interpretation of the rules, focusing on the practical implications and fairness of allowing such adjustments. Ultimately, the Tribunal's decision favored the appellant's claim for adjustment, emphasizing the legality and admissibility of the adjustment of excess Service Tax paid, leading to the setting aside of the impugned order.