2010 (4) TMI 192 - AT - Service Tax

Stock Broker Service- Assessee filed a refund claim of excess amount of service tax paid by them and refund claim for the period from October 2003 to March 2004 was found admissible and sanctioned. After going though the statements of actual payment made and payable, department found that appellant had short paid service tax during the period from April 2003 to September 2003 and department issued show cause notice and demanded this amount. The amount demanded was Rs. 1,36,173/-. No penalty has been imposed but interest has been demanded. Held that- the impugned order is set aside and the matter is remanded back to Original Adjudicating Authority with directions to consider the matter afresh. It is made clear that all the issues are kept open and opinion expressed by me would not be binding on both the sides.

Summary

Issues:
1. Refund claim for excess service tax paid and demand for short payment.
2. Adjustment of excess payment against short payment and invocation of extended period for demanding duty.
3. Consideration of limitation period for issuing show cause notice.
4. Contradictory findings regarding intention to evade payment and imposition of penalty.

Analysis:
1. The appellant, a Stock Broker Service provider, had both short payment and excess payment of service tax during different periods. A refund claim for the excess amount paid was granted for a specific period, while a show cause notice was issued for the short payment during another period. The department demanded the short paid amount of Rs. 1,36,173/- without imposing a penalty but demanding interest.

2. The advocate for the appellant argued that the excess payment made later was not claimed as a refund to avoid duplication of work. The Commissioner (Appeals) upheld that short payment cannot be adjusted against excess payment under Section 11D. The assessment of service tax and Central Excise duty is based on invoices, requiring individual transaction assessment. Adjustment can only occur after short payment is confirmed as arrears and refund is sanctioned as due to the party.

3. The issue of limitation was raised by the advocate, stating that the show cause notice was issued beyond the limitation period. The Original Adjudicating Authority found no intention to evade duty, but the Assistant Commissioner's findings were contradictory regarding the invocation of the extended period for demand.

4. The Assistant Commissioner's order was deemed contradictory as it mentioned both software/clerical error as the reason for short payment and no malafide intention to evade payment, while also confirming the demand beyond the limitation period. The Tribunal set aside the order, remanding the matter back to the Original Adjudicating Authority for proper consideration, emphasizing the need for clear findings on misdeclaration or suppression before imposing penalties or invoking the extended period. All issues were kept open for reconsideration.