2018 (7) TMI 89 - AT - Service Tax

Short payment of service tax - national roaming charges - appellants have provided such service to other mobile telecom operators and also received such services from other operators - revenue neutral situation - Held that - There is nothing brought out from the records that the appellant has falsified any records or availed wrongful credit by any act of fraud. There is nothing brought forth by the department to show that appellants are not eligible for credit of service tax paid on services received by them from other mobile phone operators. When they are eligible for credit, the entire situation is revenue neutral one. It is clear that it was an error in the accounting pattern. The short payment of service tax was only due to an error in the accounting pattern for the impugned period. Even if the appellants had paid service tax, they would be eligible for credit and the whole situation would be of no revenue loss. Demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Short payment of service tax due to accounting error.

Analysis:
1. The appellant had short paid service tax for a specific period due to an accounting error. They had paid service tax only on the differential value instead of the entire gross amount received for services provided. The original authority confirmed the demand, interest, and penalty, which was upheld by the Commissioner (Appeals), leading to this appeal.

2. The appellant argued that they had received services from other mobile operators and paid service tax on national roaming charges. Due to an accounting error, the service tax payable on roaming services received was debited to the wrong account. The appellant rectified the mistake immediately upon discovery, emphasizing that it was a procedural error and not intentional tax evasion. They claimed the situation was revenue neutral as they were eligible for Cenvat credit.

3. The respondent contended that the appellant was not entitled to Cenvat credit on the roaming services received. The Commissioner (Appeals) rejected the appellant's claim of revenue neutrality, stating that the appellant did not clarify why roaming services should be considered input services. The respondent argued that the appellant's claim lacked a legal basis.

4. The tribunal reviewed the short payment details and arguments presented. It noted that there was no evidence of falsified records or wrongful credit availed by the appellant. The tribunal found that the appellant was eligible for credit on the service tax paid for services received. It concluded that the short payment was due to an accounting error and that the situation was revenue neutral.

5. Considering the facts presented, the tribunal determined that the demand for short payment of service tax could not be sustained. The impugned order was set aside, and the appeal was allowed with any consequential reliefs. The tribunal emphasized that the entire situation was a result of an accounting error and did not lead to any revenue loss.

This detailed analysis highlights the key arguments, findings, and conclusions of the judgment regarding the short payment of service tax due to an accounting error.