2019 (12) TMI 1130 - HC - Service Tax

Adjustment to the excess payment of service tax with the short paid tax - Rule 6(4A) of the Service Tax Rules, 1994 - HELD THAT - without specifically mentioning or referring to the relevant conditions for granting the benefit of adjustment in respect of the excess payment, the Tribunal simply observed that failure to comply with certain procedural conditions cannot be a ground to deny substantial benefit and that in principle, there can be no objection to the adjustment of service tax short paid and excess paid. But here again, it is to be noted that the said finding and reasoning were given by the Tribunal with reference to some chart prepared by the Appellant there, who is Respondent herein, as to the remittances revealing the excess payment. It is also evident from paragraph-3 of the order that, such a chart was not forming part of the proceedings before the adjudicating authority and that the said chart prepared on behalf of the assessee was produced by the learned counsel for the Respondent before the Tribunal with reference to the period of dispute, the payment affected to the tune of ₹ 1 crore 77 lacs and such other aspects. Since the remedy provided against the order of the Tribunal is only under limited circumstances as envisaged under Section 35G of the Central Excise Act, 1944, it was quite necessary for the Tribunal to have considered and discussed the relevant provisions of law, to sustain the order, which unfortunately is lacking in the instant case. More so, despite completion of service of notice to the Respondent, who was Appellant before the Tribunal has not chosen to appear before this Court, to put forth their version with regard to the sequence of events, the facts and figures and the relevant provisions of law. The substantial question of law suggested by the learned counsel for the Appellant-Revenue and raised, as taken note of by this Court in is answered in favour of the Revenue - Appeal allowed - decided in favor of Revenue.

Summary

Issues:
Challenge to order dated 26.04.2018 by Appellant-Revenue regarding excess payment adjustment.

Analysis:
The Appellant-Revenue challenged the order dated 26.04.2018 passed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) on the grounds that the statutory provisions for granting relief regarding excess payment were not discussed in the order. The Respondent, a registered establishment under service tax categories, was found to have made short payments totaling a significant amount. A show-cause notice was issued, leading to an order for recovery of the deficit amount with interest and penalty. The Respondent appealed to CESTAT, where the order of the adjudicating authority was set aside, and the matter was remitted for adjustment consideration. The Appellant argued that the adjustment to excess payment should adhere to specific conditions outlined in the Service Tax Rules, particularly Rule 6(4A) and Rule 6(4B), which were not adequately addressed in the Tribunal's order.

The Tribunal's decision was based on the assertion that the adjustment between excess and short payments was not compliant with statutory procedures by the assessee. The Tribunal allowed for adjustment and remanded the matter to the Adjudicating Authority for further consideration, emphasizing the need for verification of relevant records regarding service tax payments. However, the Tribunal's decision lacked specific reference to the conditions for granting adjustment in cases of excess payment. The Appellant highlighted the necessity for the Tribunal to discuss relevant legal provisions to sustain its order, especially considering the limited remedies available against Tribunal orders under Section 35G of the Central Excise Act, 1944. Despite notice completion, the Respondent did not present their version before the Court, leading to the Court answering the substantial question of law in favor of the Revenue, setting aside the order and remitting the matter for fresh consideration by the Tribunal after hearing both sides.

In conclusion, the Court allowed the appeal, emphasizing the importance of considering and discussing relevant legal provisions in Tribunal orders, especially in cases involving adjustment of excess payments, to ensure procedural compliance and fairness in adjudication processes.