2024 (5) TMI 10 - AT - Service Tax

Eligibility to make adjustment of excess service tax paid against future service tax liability - Appellant raised three supplementary invoices due to increased packing costs for their customer. However, the customer rejected these invoices, leading the appellant to revise their claims and submit a revised invoice. - Only reason for rejecting the appeal by the Lower Appellate Authority is that the appellant has filed a refund claim for the entire excess tax paid on the 3 supplementary invoices originally raised - HELD THAT - It is to be observed that the appellant could not have filed refund claim for the full excess service tax paid and simultaneously used a part of the excess service tax paid towards service tax liabilities in subsequent months. It is also noted that the appellant has submitted the refund claim under Section 11B of the Central Excise Act, 1944, as made applicable to Finance Act, 1994. This refund claim was rejected by the Original Adjudicating Authority on the ground that the appellant has adjusted a part of the credit taken. On appeal, the Commissioner (Appeals) vide Order-in-Appeal No. 594/2018 dated 19.12.2018, had rejected their appeal upholding the Order-in-Original, which was remanded by the CESTAT for denovo consideration. The stage at which these proceedings are pending is not coming out from the facts in this appeal. The decision of the Lower Appellate Authority affirmed holding that the appellant is eligible for adjustment of the service tax liability on the subsequent supplementary invoice raised against the excess service tax paid on the original supplementary invoices which were not paid by their customer Viz., M/s. Tata Steel Limited. It is found that the appellant has submitted Chartered Accountant s Certificate to the effect that they have cancelled 3 supplementary invoices raised originally and that they have not received any consideration in respect of these invoices. The impugned Order-in-Appeal is not sustainable and ordered to be set aside - Appeal allowed.

Summary

Issues Involved:

1. Adjustment of excess Service Tax paid against future Service Tax liability.
2. Time-barred nature of the Show Cause Notice (SCN).
3. Legality of the refund claim and its adjudication.

Summary:

Adjustment of Excess Service Tax Paid Against Future Service Tax Liability:

The appellant, M/s. Tata Steel Processing and Distribution Limited (TSPDL), raised supplementary invoices due to increased packing costs and paid Service Tax and Cess. These invoices were later rejected by their customer, M/s. Tata Steel Ltd. The appellant revised the invoices and adjusted the excess Service Tax paid against future Service Tax liabilities. However, the Department contended that this adjustment was incorrect u/s 6(3) of the Service Tax Rules, 1994, leading to a demand of Rs.11,35,700/- u/s 73 of the Finance Act, 1994, along with interest u/s 75 and a penalty of Rs.1,13,570/- u/s 76. The adjudicating authority confirmed this demand, which was upheld by the Commissioner (Appeals).

Time-Barred Nature of the Show Cause Notice (SCN):

The appellant argued that the SCN No. 08/2019 dated 10.10.2019 was time-barred and issued as an afterthought following the rejection of their refund claim. The SCN was issued after the Order-in-Original and Order-in-Appeal had already rejected the refund claim on the grounds that the amount claimed was already adjusted by the appellant.

Legality of the Refund Claim and Its Adjudication:

The appellant had filed a refund claim u/s 11B of the Central Excise Act, 1944, as applicable to the Finance Act, 1994, for the excess Service Tax paid. This refund claim was initially rejected on the grounds that the amount was already adjusted by the appellant. The Commissioner (Appeals) upheld this rejection, but the Hon'ble CESTAT remanded the matter for fresh consideration. The appellant contended that the adjudicating authority ignored the CESTAT's Final Order No. 41276/2019, which recorded that the appellant was not contesting the refund for the adjusted portion of the Service Tax paid.

Judgment:

The Tribunal found that the appellant was eligible for the adjustment of the excess Service Tax paid against future Service Tax liabilities. The Tribunal noted that the appellant had submitted a Chartered Accountant's Certificate confirming the cancellation of the original supplementary invoices and that no consideration was received for these invoices. Consequently, the Tribunal set aside the impugned Order-in-Appeal No. 55/2022 dated 28.10.2022 and allowed the appeal with consequential relief as per the law.

(Order pronounced in open court on 29.04.2024)