2009 (8) TMI 678 - AT - Service Tax

Penalty - Commissioner (Appeals) confirmed demand of service tax, interest thereon and equal amount of penalties on assessee. On stay application, assessee contended that it had already paid amount against differential tax liability of service tax as said amount was collected by it erroneously from customers and same may be adjusted against impugned demand. Held that - since assessee had already deposited sum along with interest although collected erroneously, treating same as sufficient, pre deposit of penalty was to be waived and recovery thereof was to be stayed.

Summary

Issues:
1. Formation of Committee as directed by the Apex Court
2. Stay application against the order of Commissioner (Appeals)
3. Payment of service tax by the applicant
4. Adjustment of erroneously collected amount against the demand
5. Time-barred show-cause notice

Analysis:

Formation of Committee as directed by the Apex Court:
The judgment refers to the directive by the Apex Court in Oil & Natural Gas Corpn. Ltd. v. City & Industrial Development Corpn., Maharashtra Ltd., regarding the formation of a Committee comprising specific officials from Central and State Governments and undertakings to resolve differences. The Tribunal noted the absence of such a Committee and cited a previous case where the necessity of Committee clearance was discussed. Since no Committee was formed, the Tribunal proceeded with the case without 'COD clearance.'

Stay application against the order of Commissioner (Appeals):
The applicant, a State Government undertaking, filed a stay application against the Commissioner (Appeals) order confirming a demand of Rs. 2,70,027 along with interest and penalty. The applicant contested the demand, stating that they had already paid a portion of the amount collected erroneously from customers and sought adjustment against the impugned demand. The applicant also argued that the show-cause notice was time-barred.

Payment of service tax by the applicant:
The applicant had paid Rs. 2,70,027 against the differential tax liability of service tax, collected erroneously from customers, and a balance along with interest. The applicant requested adjustment of the amount collected erroneously between specific dates against the demand. The applicant's counsel emphasized the payment made and the time frame of collection.

Adjustment of erroneously collected amount against the demand:
The applicant sought to adjust the amount erroneously collected from customers against the demand raised. The applicant's counsel argued for the adjustment based on the payment already made by the applicant, highlighting the specific period during which the erroneous collection occurred.

Time-barred show-cause notice:
The issue of the show-cause notice being time-barred was raised during the proceedings. The applicant contended that the notice was beyond the stipulated time frame, while the SDR argued for the invocation of the extended period due to the applicant's failure to correlate statements. The Tribunal considered the time-bar aspect in its decision regarding the stay application.

In conclusion, the Tribunal granted waiver of pre-deposit of penalty and stayed the recovery during the appeal, taking into account the payment made by the applicant and the arguments presented regarding the adjustment and time-barred aspects of the case.