2006 (1) TMI 17 - AT - Service Tax

Service Tax Telephone Service (1) Respondent has not paid amount to the credit of Central Govt. as well as not refunded the value of service tax to their customers to whom they provided the service (2) Adjustment of tax not allowed (3) Limitation (4) Demand (5) Show cause notice

Summary

Issues:
1. Appeal against the order in appeal passed by the Commissioner (Appeals) regarding Service Tax adjustment under Rule 6(3) of Service Tax Rules, 1994.
2. Entitlement of adjustment under Rule 6(3) of the Service Tax Rules, 1994.
3. Time bar for the demands raised in the show cause notices.

Analysis:
1. The appeal was filed by the Revenue against the Commissioner (Appeals) order allowing the respondents' appeal concerning the adjustment of Service Tax under Rule 6(3) of the Service Tax Rules, 1994. The Revenue contended that the adjustment is permissible only if the assessee has refunded the value of service tax to the persons from whom it was received. The Revenue argued that since the appellant paid the Service Tax to the DOT without refunding any amount, no adjustment is allowed. The Revenue also claimed that the appellant did not disclose these facts in the return, making the demand not time-barred. The Tribunal found that the adjustment is not permissible as the respondents did not refund any amount in respect of the taxable service and the service tax. The Tribunal set aside the Commissioner (Appeals) finding in favor of the respondents.

2. Regarding the time bar, the Tribunal analyzed the demands raised in the show cause notices. For the demand raised in the notice dated 16.10.2003, covering the period April 2002 to September 2002, the return was filed on 24.10.2002, and the notice was issued on 16.10.2003, falling within the normal limitation period. As the adjustment was not allowed, the demand was not time-barred. However, for the demand in the notice dated 20.4.2004 for the period April 1999 to September 1999, the respondents had declared the reasons for adjustment in the return filed on 22.10.99. The Tribunal concluded that no suppression to evade Service Tax could be alleged against the respondents for this demand. Therefore, the demand raised in the notice dated 20.4.2004 was considered time-barred. The appeal was disposed of accordingly.