2019 (5) TMI 1409 - AT - Service Tax

Recovery of service tax short paid - Excess of service tax paid - adjustment of excess paid service tax with short paid service tax -Applicable rate of tax - extended period of limitation - HELD THAT - The Appellant has paid Service Tax of ₹ 77,56,170.69/- in excess in some months during 10/2000 to 03/2004 as they were not able to estimate their correct Service Tax liability and to be on the safer side, they used to pay Service Tax provisionally which were never less than Service Tax actually payable by them, which were adjusted by them during subsequent months. The Tribunal in the Appellant s own cases in THE GENERAL MANAGER, M/S BHARAT SANCHAR NIGAM LIMITED VERSUS CCE, RAIPUR AND VICE-VERSA 2014 (6) TMI 768 - CESTAT NEW DELHI and in the case of M/S. THE GENERAL MANAGER, TELECOM, BSNL VERSUS CCE, RAIPUR 2014 (10) TMI 419 - CESTAT NEW DELHI and in the case of BSNL VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH 2011 (7) TMI 946 - CESTAT, NEW DELHI have allowed adjustment of excess Service Tax paid against short payment of Service Tax. Applicable rate of tax - HELD THAT - The services were provided by the Appellant during 10/2000 to 13-05-2003 when the rate of tax was 5% whereas, the value of taxable services were received during 14-05-2003 to 03/2004 when the rate of tax was 8%. It is well settled that the rate of tax shall be the rate as applicable on the date of provision of taxable services and not the date of receipt of value of such taxable services. Extended period of limitation - HELD THAT - The demand in the instant case is barred by limitation as for the self same period, the Ld. Commissioner vide the earlier adjudication order dated 30-03-2007 has held that the Appellant has been regularly filing ST-3 returns and reflecting payment of Service Tax and that there is no suppression of fact or intent to evade payment of duty - demand barred by limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Short payment of Service Tax during specific period.
2. Imposition of penalties under Sections 76 and 78 of the Finance Act, 1994.
3. Application of wrong tax rate.
4. Barred by limitation.

Analysis:

Issue 1: Short payment of Service Tax during specific period
The case involved a Show Cause Notice issued for the recovery of Service Tax short paid by the Appellant during a specific period. The Ld. Commissioner confirmed the Service Tax demand along with penalties. The Appellant contended that there was no short payment as the entire Service Tax for the period had been paid through book transfer. They argued that the demand arose due to non-adjustment of advance/excess payments against short payments, which was not raised earlier. The Appellant relied on previous Tribunal decisions allowing adjustment of excess payments against short payments. The Tribunal found merit in the Appellant's contentions and set aside the impugned order.

Issue 2: Imposition of penalties under Sections 76 and 78
The Ld. Advocate argued that there was no suppression of facts or intent to evade payment of duty. They contended that the demand was due to non-adjustment of excess payments and not short payment. The Tribunal agreed with the Appellant, citing previous decisions supporting the adjustment of excess payments against short payments. Consequently, the Tribunal set aside the penalties imposed under Sections 76 and 78 of the Finance Act, 1994.

Issue 3: Application of wrong tax rate
The Appellant argued that a portion of the Service Tax demand was calculated using the wrong tax rate. They claimed that the tax rate should have been 5% instead of 8% for services provided during a specific period. The Tribunal agreed with the Appellant, citing established principles that the tax rate should be based on the date of provision of taxable services. Relying on previous case laws, the Tribunal supported the Appellant's position and set aside the incorrect tax rate applied.

Issue 4: Barred by limitation
The Ld. Advocate contended that the entire demand was barred by limitation as the facts were disclosed in the ST-3 returns for the same period in a previous adjudication order. The Tribunal agreed with the Appellant, finding that there was no suppression of facts to evade payment of duty. Citing previous decisions, the Tribunal held that the demand was indeed barred by limitation. Consequently, the Tribunal allowed the appeal with consequential reliefs to the Appellant, setting aside the impugned order.