2018 (8) TMI 1224 - AT - Service Tax

Demand of Interest - Suo motto adjustment of excess service tax paid in the subsequent months - Section 11B of the Central Excise Act read with Section 83 of Finance Act, 1994 - Held that - It is an admitted fact that the appellant on account of practical difficulties, paid the service tax in advance. Further, the BSNL is a Government owned company and the subscriber cannot be made to pay the service tax directly to the registration office but the payment is to be routed through the Customer Service Centres - in the present case, it was the excess payment which was made and the same was adjustment during the subsequent months but the Department raised the objection that the same Cannot be and therefore the Department is asking for the interest for the period until it becomes proper payment by way of sanction of refunds. The Department should have considered the practical difficulties on account of which the appellant has devised the system of paying in advance and subsequently adjusting the excess payment and we do not find any infirmity in the procedure followed by the appellant and the Department has also not raised objection from the very beginning. The impugned order demanding interest is not sustainable in law - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appellant challenges the order upholding 5 Orders-in-Original and rejecting appeals.
- Provisional calculation and payment of service tax by the appellant.
- Department's objection to appellant's suo motto adjustment for excess payment.
- Demand for interest by the Department for delayed payment.
- Applicability of Rule 6(4A) of the Service Tax Rules, 1994 to the appellant.
- Interpretation of law regarding adjustment of excess service tax payment.

Analysis:

1. The appellant filed 5 appeals against the common impugned order where the Commissioner(Appeals) upheld 5 Orders-in-Original and rejected the appeals. The issue in all 5 appeals being identical, they were disposed of by a common order.

2. The facts of the case reveal that the appellant, a service provider of telecommunication services, faced challenges in compiling and calculating service tax collected due to scattered payment locations. The appellant provisionally calculated and paid service tax, adjusting excess payments in subsequent months. The Department objected to this adjustment, demanding interest for delayed payment.

3. The appellant argued that the impugned order did not consider the peculiar facts of the case. They highlighted being a PSU with centralized billing despite multiple service locations. The appellant contended that the adjustment was known to the Department, with no objection until an audit objection was raised.

4. The Department argued that the appellant, lacking centralized registration, was not entitled to suo motto adjustment of excess service tax payments under Rule 6(4A).

5. Upon review, it was acknowledged that the appellant faced practical difficulties, leading to advance payment of service tax. The appellant, a Government-owned company, paid tax before the 5th of the following month and adjusted excess payments in subsequent months, a practice known to the Department.

6. Citing a previous case, the Tribunal noted the appellant's entitlement to substantial relief under Rule 6(4A) and the necessity for a rational decision considering practical difficulties. The Tribunal found no fault in the appellant's procedure and criticized the Department for demanding interest without considering the appellant's challenges.

7. Ultimately, the Tribunal set aside the impugned order, ruling in favor of the appellant and allowing all appeals. The judgment emphasized the appellant's entitlement to adjust excess payments and criticized the Department for demanding interest without considering the practical difficulties faced by the appellant.

This detailed analysis highlights the key issues, arguments presented by both sides, and the Tribunal's decision, providing a comprehensive understanding of the legal judgment.