2025 (2) TMI 681 - AT - Service Tax

Adjustments of excess Service tax against Service Tax liability - interpretation of the term month in terms of Rule 6(4A) of the Service Tax Rules 1994 - HELD THAT - Going by the provisions of Rule 6(4A) of the Service Tax Rules 1994 it appears that such excess amount paid by the Appellant against its Service Tax liability can be adjusted in the succeeding month or quarter but at this juncture it is also required to reproduce section 13 of General Clauses Act 1897 to give meaning to the use of words month or quarter as provided in the Service Tax Rules which is a statutory provision incorporated by the Central Government. Going by sub-clause 2 of section 13 that is applicable to all Central Government Acts and Regulations it is crystal clear that words used in singular would also mean its plural and vice-versa and therefore adjustments of excess Service Tax paid in subsequent months/quarters can be held to be valid otherwise if after adjustment in a quarter any balance amount would still be available that was permitted to be adjusted against excess payment would lapse to the detriment of the assesse. Apart from the statutory provision also judicial pronouncements even at the Apex Court level are consistent in giving findings that in construing a statutory provisions words in the singular are to include also its plurals. Conclusion - Such adjustment of service tax made by the Appellant in different months after such excess payment come to its knowledge is appropriate and in conformity to Rule-6(4A) of the Service Tax Rules. The impugned order is set aside - appeal allowed.

Summary

The issues presented and considered in the legal judgment are as follows:1. Whether the adjustment of excess Service Tax paid by the Appellant in different months following the initial overpayment is permissible under Rule-6(4A) of the Service Tax Rules 1994.2. Whether the interpretation of the term "month" in Rule-6(4A) as singular or plural affects the validity of the adjustments made by the Appellant.3. Whether the decision of the Commissioner (Appeals) confirming the demand for Service Tax, interest, and penalty on the Appellant was correct.Issue-Wise Detailed Analysis:The Appellant had paid an excess amount of Rs. 1,64,14,630/- towards Service Tax liability for September 2012, which was adjusted against subsequent liabilities from October 2012 to February 2014. The Respondent Department contended that such adjustments were improper as Rule-6(4A) only permits adjustments against the succeeding month or quarter, not multiple months or quarters. The matter was adjudicated, and the demand for the adjusted Service Tax, interest, and penalty was confirmed. The Appellant appealed the decision.The Appellant argued that the term "month" in Rule-6(4A) should be interpreted as "months" based on various judicial precedents and the General Clauses Act, which states that singular words can include the plural form. The Appellant also cited a previous decision of the Tribunal to support the interpretation that "succeeding month" does not necessarily mean the immediate next month. The Appellant sought relief based on these arguments.On the other hand, the Authorized Representative supported the decision of the Commissioner (Appeals) and referenced a CBEC Circular stating that adjustments can only be made in the succeeding month or quarter, not over multiple months or quarters.The Tribunal analyzed Rule-6(4A) of the Service Tax Rules 1994, which allows for the adjustment of excess amounts paid in a month or quarter against the succeeding month or quarter. The Tribunal also considered Section 13 of the General Clauses Act 1897, which clarifies that singular words can include the plural form. The Tribunal cited judicial precedents, including a Supreme Court judgment, emphasizing the need for a just and reasonable interpretation of statutes to avoid absurdity or inconsistency.Significant Holdings:The Tribunal held that the adjustment of Service Tax made by the Appellant in different months following the initial overpayment was appropriate and in conformity with Rule-6(4A) of the Service Tax Rules. The Tribunal allowed the appeal and set aside the order of the Commissioner (Appeals) confirming the demand for Service Tax, interest, and penalty.In conclusion, the Tribunal's decision emphasized the importance of interpreting statutory provisions in a just and reasonable manner, considering the context and legislative intent. The Tribunal's ruling established that adjustments of excess Service Tax paid in subsequent months were permissible under Rule-6(4A) and the General Clauses Act, leading to the allowance of the appeal and the setting aside of the Commissioner (Appeals) order.(Order pronounced in the open court on 17.02.2025)