2018 (9) TMI 1141 - AT - Service Tax

Demand of amount collected in the name of service tax - section 11D of the Central Excise Act - Held that - Sub-section (1) of 11D will apply only to the person who is liable to pay duty and where the person has collected any amount in excess. - The Commissioner (Appeals) has correctly concluded that when the assessee would not come under the ambit of service tax prior to 16.05.2005, Section 11D(1) would not be applicable. Adjustment of an amount of ₹ 2,73,952/- paid by the respondent - said amount was paid by mistake of law - Held that - Sub-section (4) of 11D provides for adjustment of such amount inter alia arising against any other proceeding for determination of duty of excess. This being so, the action is within the boundaries of law. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Setting aside the demand under Section 11D of the Central Excise Act.
2. Adjustment of an amount paid against demand for a subsequent period.

Analysis:

Issue 1: Setting aside the demand under Section 11D of the Central Excise Act
The Department appealed against the order of the Commissioner (Appeals) setting aside the demand of ?1,07,206 under Section 11D of the Central Excise Act. The revenue contended that there is no provision for adjusting the amount paid to the Central Government and that any tax collected must be deposited, regardless of falling under the tax net or not. The Tribunal noted that the Commissioner (Appeals) correctly concluded that Section 11D(1) would not be applicable as the assessee was not liable to pay service tax before a certain date. The Tribunal upheld the decision of the Commissioner (Appeals) on this issue.

Issue 2: Adjustment of an amount paid against demand for a subsequent period
Regarding the adjustment of ?2,73,952 paid by the respondent for a period before a specific date, the Tribunal found that this amount was paid by mistake of law. The Commissioner (Appeals) allowed the adjustment of this amount against the demand for a later period, which the Tribunal deemed appropriate to prevent a miscarriage of justice. The Tribunal highlighted an amendment in Section 11D to cover situations of excess amounts collected, providing for adjustments against other proceedings for determination of duty. The Tribunal dismissed the Department's appeal on this issue, stating that the action was within the boundaries of the law.

In conclusion, the Tribunal dismissed the Department's appeal as lacking merit and upheld the decision of the Commissioner (Appeals) regarding both the setting aside of the demand under Section 11D and the adjustment of the amount paid against the demand for a subsequent period. No interference was made with the remaining part of the impugned order.