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2019 (2) TMI 17 - AT - Service TaxSuo-moto adjustment of excess service tax paid - no intimation made to Department about such adjustment - Sub-section 4A of Rule 6 of Service Tax Rules, 1994 - scope of SCN - Held that - On perusal of SCN it is seen that the allegation is limited to the adjustment made by the appellant. There is no allegation that such adjustment is with regard to the commission received after 01.04.2005 for the services provided prior to 31.03.2005, etc. - Since the SCN does not make any such allegation, such observation made by the adjudicating authority is definitely beyond the scope of SCN. Whether the adjustment made by the appellant is sustainable? - Held that - In Central Excise Law there is no such provision for adjustment. In case of excess payment of duty the only option available to the assessee is to apply for refund under Section 11B of the said Act. However, the legislature has made provisions for adjustment of excess tax paid in the Service Tax Rules. This is to facilitate the assessee so as to eliminate the hassles to obtaining the refund. If the assessee has made excess payment, the same can be adjusted towards the liability for subsequent months. The essence of this provision is to help the assessee who has made excess payment to utilize such excess amount to pay up the tax liability for other period. The demand cannot sustain - Appeal allowed - decided in favor of appellant.
Issues:
1. Short payment of service tax and education cess during a specific period. 2. Allegation of adjustment made by the appellant without informing the department. 3. Dispute regarding the liability to pay service tax on commission for mutual fund distribution. 4. Legal validity of adjustment made by the appellant. 5. Scope of the Show Cause Notice (SCN) and observations made by the adjudicating authority. Analysis: 1. The appellant was found to have short paid service tax and education cess during a particular period, leading to a demand for payment along with interest and penalties. The appellant argued that they had inadvertently paid service tax on commission for mutual fund distribution, which was not required post a specific date. They adjusted the excess payment against the subsequent months' liabilities and had disclosed this adjustment in their returns. 2. The appellant contended that the adjustment made was permissible under Sub-section 4A of Rule 6 of Service Tax Rules, 1994. They cited precedents where similar adjustments were allowed by the Tribunal. The appellant emphasized that there was no intention to evade payment, and the adjustment was a procedural lapse at most. The department argued that the adjustment was in violation of the law as the appellant did not inform the department about it. 3. The issue of liability to pay service tax on commission for mutual fund distribution was discussed. The Tribunal noted the shift in liability as per Notification 7/2005-ST and the appellant's actions in discharging service tax even when not required post the specified date. The Tribunal referred to previous cases where adjustments for excess payments were allowed, highlighting the facilitative nature of such provisions in Service Tax Rules compared to Central Excise Law. 4. The Tribunal found that the demand could not be sustained and needed to be set aside. They emphasized the legislative provision for adjustment of excess tax paid in Service Tax Rules to assist taxpayers in utilizing excess amounts for subsequent liabilities. The Tribunal concluded that the adjustment made by the appellant was valid and in line with the legal framework, ultimately allowing the appeal with consequential benefits. 5. The Tribunal addressed the scope of the Show Cause Notice (SCN) and the observations made by the adjudicating authority, noting that certain observations were beyond the allegations in the SCN. The Tribunal stressed the importance of sticking to the issues raised in the SCN and not introducing new allegations during adjudication. This detailed analysis of the judgment from the Appellate Tribunal CESTAT CHENNAI highlights the key issues, arguments presented by both parties, legal interpretations, and the final decision rendered by the Tribunal.
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