2018 (6) TMI 1079 - AT - Service Tax

Adjustment of excess Service Tax paid - Service tax on GTA on the 100% amount paid without availing abatement of 75% - SCN was issued on the ground that as per provisions of sub-rule 4B of Rules 6 of Service Tax Rules, 1994 adjustment of excess paid service tax can only be made in the succeeding month and not beyond that - Held that - Firstly, the notification is concessional notification. Unlike in Central Excise law wherein the unconditional notification should be mandatorily availed by the assessee, similar provision is not available in service tax. Therefore, it is open for the assessee whether to avail the abatement provided under notification or to pay service tax on GTA on the 100% amount - payment of service tax by the appellant on 100% of the transportation charge is legal and correct. Secondly, appellant was legally entitled for CENVAT credit of service tax paid by them on GTA. Therefore, the objections raised by the audit are unsustainable. Appellant, after reversal of the credit adjusted the excess paid service tax against the service tax liability for the subsequent period - since appellant was entitled for CENVAT credit on the excess paid service tax the entire exercise is revenue neutral. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Delay in filing COD application
2. Admissibility of CENVAT credit on service tax paid

Analysis:
1. The COD application was allowed due to the applicant's explanation of not receiving the impugned order on time, leading to a delay in filing the appeal. The applicant filed an affidavit explaining the delay, which was accepted as the department failed to provide evidence contradicting the reasons stated. The COD application was granted based on the applicant's explanation.

2. The appellant paid service tax on GTA on the full amount without availing the 75% abatement applicable and claimed credit for the full amount paid. An audit objection was raised stating that service tax is payable only on 25% of the transportation charges, making the credit on the remaining 75% inadmissible. The appellant reversed the credit and treated it as excess payment, adjusting it against the subsequent service tax liability. However, a show cause notice was issued citing a rule that excess paid service tax adjustment can only be made in the succeeding month, leading to a demand confirmation with interest and penalty.

3. The appellate authority rejected the appellant's appeal, upholding the demand. The tribunal, after considering submissions and records, found that the appellant was legally entitled to pay service tax on the full amount and claim CENVAT credit accordingly. The objections raised during the audit were deemed unsustainable, and the adjustment of excess paid service tax against subsequent liability was considered revenue neutral. The impugned order was set aside, and the appeal was allowed, ruling in favor of the appellant.