2023 (2) TMI 780 - AT - Service Tax

Error in payment of service tax - service tax registration number of another unit used wrongly - Non-payment of Service Tax at their Anjar unit on services received from abroad on reverse charge basis - instead of Anjar unit the service tax paid by the head office at Mumbai - HELD THAT - There is no dispute as the same was admitted in the show cause notice as well as in the impugned order that the service tax of Rs. 78,17,225/- was deposited by the appellant s head office at Mumbai under different registration number of input service distributor. The appellant s Anjar unit is not a separate entity as the same is part of a single entity i.e. Welspun Gujarat Stahi Rohren Ltd which is now known as Welspun Corp Ltd. Therefore, the payment made by head office under different registration number cannot be demanded from the Appellant s Anjar Unit and if at all there is discrepancy of different registration of head office the department could have adjusted service tax paid by the head office against the service tax due of appellant s Anjar unit. From the Circular No 58/7/2003 dated 20.05.2003 it is clear that the discrepancy such as payment of service tax under wrong registration can be adjusted against the correct registration for which the service tax is actually due. In the present case even though the service tax was paid under the registration of head office Mumbai but the appellants Anjar unit as well as their Mumbai head office is one single entity. Accordingly, in the light of the above circular the department could have made the necessary adjustment instead of raising the demand twice on the appellant. The issue has been well settled in many cases. Reliance may be placed in the case of M/S. WESTERN COALFIELDS LTD VERSUS COMMISSIONER OF EXCISE SERVICE TAX 2019 (4) TMI 1075 - CESTAT MUMBAI where it was held that As long as the duty is paid and credited duly to the Govt. of India account, procedural infractions which are curable in nature will not nullify such payments. Demanding such duty second time is certainly harsh and has no sanction of law, more so along with interest and penalty. From the above judgments and board circular cited it is settled that merely because the service tax paid under different registration but by the same company, cannot be tent a mount to non- payment of service tax. Hence, the demand of service tax which was already paid cannot be made twice. Accordingly, demand of service tax in this case is also not sustainable. Appeal allowed.

Summary

Issues Involved:
1. Whether the service tax paid by the head office can be adjusted against the service tax dues of the Anjar unit.
2. Whether the demand for service tax is sustainable when the tax has already been paid under a different registration number.
3. Applicability of penalties under sections 76, 77, and 78 for non-declaration of consulting engineering services in ST-3 returns.

Issue-wise Detailed Analysis:

1. Adjustment of Service Tax Paid by Head Office:
The appellant argued that the service tax paid by their head office in Mumbai should be considered as payment for the Anjar unit's dues. The tribunal found that the Anjar unit and the Mumbai head office are part of a single entity, Welspun Gujarat Stahi Rohren Ltd (now Welspun Corp Ltd). The tribunal cited a Board Circular No. 58/7/2003, which allows for the adjustment of service tax paid under an incorrect registration number. The tribunal emphasized that the department should have adjusted the service tax paid by the head office against the Anjar unit's dues instead of raising a fresh demand.

2. Sustainability of Service Tax Demand:
The tribunal noted that the service tax of Rs. 78,17,225/- was already deposited by the appellant's head office. The tribunal referred to several judgments, including Devang Paper Mills Pvt Ltd vs. UOI, Commissioner of C. Ex & ST, Bhopal Vs. KK. Kedia, and M/s. Sahara India TV Network vs. CCE & ST, which support the view that payment of tax under a different registration number but by the same entity should not result in a fresh demand. The tribunal concluded that the demand for service tax in this case is not sustainable because the tax was already paid, albeit under a different registration number.

3. Applicability of Penalties:
The tribunal did not find any malafide intent or deliberate evasion of tax by the appellant. The non-declaration of consulting engineering services in the ST-3 returns was due to a clerical error, and the service tax was already paid by the head office. The tribunal cited the case of M/s. Sahara India TV Network vs. CCE & ST, where it was held that penalties should not be imposed in the absence of malafide intent. Consequently, the tribunal set aside the penalties imposed under sections 76, 77, and 78.

Conclusion:
The tribunal set aside the impugned order, allowing the appeal and directing that the necessary adjustments be made in accordance with the procedure prescribed in the relevant circulars and judgments. The demand for service tax was deemed unsustainable, and the penalties were annulled. The tribunal's decision was pronounced in the open court on 03.02.2023.