2023 (12) TMI 526 - AT - Service Tax

Discharge of service tax liability by book adjustment - Instructions dated 21.03.2023 issued by the Central Board of Indirect Taxes and Customs - HELD THAT - It would be seen from the Instructions that the Board had directed that in all cases pending adjudication where the duty/tax had been demanded only on account of the fact that amount due as tax/duty had not been paid as per the procedure laid down but by book adjustment, the adjudicating authority may focus on the reconciliation of duty/tax paid by book adjustment - It is, therefore, clear from the aforesaid Instructions that payment of service tax by book adjustment has been accepted by the Board. Whether reconciliation was provided to the adjudicating authority? - HELD THAT - It is seen that the Principal Commissioner, in view of the decision of the Tribunal in M/S. FA CAO, ECR, HAJIPUR VERSUS COMMISSIONER OF CGST CX, PATNA-II COMMISSIONERATE 2021 (7) TMI 1407 - CESTAT KOLKATA , noted that the accounts have not been audited by Comptroller and Auditor General of India. It is apparent that the words Comptroller and Auditor General in the aforesaid order of the Tribunal have been mistakenly written for the words Controller General of Accounts . This fact is also clear from the Instructions of the Board wherein reference has been made to Controller General of Accounts. In the present case, the details of book transfer of the service tax was submitted to the Principal Commissioner from the site of the Controller General of Accounts and the communication dated 13.10.2022 of the Railway Boards clearly provide evidence of transfer of service tax - since the data provided by the appellant has been taken from the website of Controller General of Accounts, Ministry of Finance, the directions contained in the Instructions dated 21.03.2023 stand fulfilled. The appellant, therefore, made payment of service tax by book adjustment. The impugned order dated 31.10.2022, therefore, cannot be sustained and is set aside - Appeal allowed.

Summary

Issues:
The appeal involved the consideration of whether the appellant could discharge service tax liability by 'book adjustment' and the acceptance of such method by the Board.

Issue 1 - Payment of Service Tax by Book Adjustment:
The appellant filed an appeal challenging three show cause notices for the period from October 2012 to June 2017. The main issue was whether the appellant could have discharged service tax liability by 'book adjustment'. The department contended that payment should have been made through TR-6 challan or electronically, not by book adjustment. The appellant relied on Instructions by the Central Board of Indirect Taxes and Customs, which allowed payment by book adjustment in certain cases to avoid unnecessary litigation. The Board directed that in cases where tax was demanded due to non-compliance of payment procedure but paid through book adjustment, the focus should be on reconciliation of the payment. The appellant submitted a reconciliation statement and evidence of payment through book adjustment, as per the Board's instructions.

Issue 2 - Reconciliation of Payment by Book Adjustment:
The adjudicating authority did not accept the reconciliation provided by the appellant, citing the lack of final accounts or evidence of audit by the Comptroller and Auditor General. However, the Tribunal noted that the accounts had been audited by the Controller General of Accounts, not the Comptroller and Auditor General. The Railway Board's communication detailed the remittance of service tax through book adjustment, providing evidence of payment. The Tribunal found that the appellant had fulfilled the requirements laid down in the Instructions by submitting data from the Controller General of Accounts website. Consequently, the Tribunal set aside the impugned order and allowed the appeal.

The impugned order dated 31.10.2022 was set aside, and the appeal was allowed based on the fulfillment of requirements for payment by book adjustment as per the Instructions by the Central Board of Indirect Taxes and Customs.