2010 (5) TMI 475 - AT - Service Tax

Payment of service tax Excess service tax paid - excess amount paid becomes refundable to the assessee - Revenue having disagreed for adjustment, the demand arose - Held that When the Rules are subordinate to the legislation, that should not act as master to deprive the deserved, who may be considered for grant of appropriate adjustment of the excess tax paid. The Adjudicating authority shall workout the modality as permissible under law to settle the dispute at its level in both cases.

Summary

Issues:
1. Whether COD clearance is required for a bank considered a public sector entity.
2. Whether excess service tax paid for a period can be adjusted against service tax payable for subsequent periods.
3. Whether adjustment of excess amount paid during a return period against demand arising for a different period is permissible under law.

Analysis:
1. The appellant argued that COD clearance was not required as the bank in question was not a public sector entity due to the absence of shareholding by the Government of India. The Tribunal considered this clarification and decided to dispose of both appeals together due to a common issue.

2. The appeals involved service tax demands for specific periods, with the main issue being whether excess service tax paid could be adjusted against the service tax payable for subsequent periods. The Revenue disagreed with the adjustment, leading to the demands in question.

3. The Tribunal emphasized that no one should be required to pay any amount not due to the State, nor should what is due be sacrificed. It highlighted the importance of finding ways to mitigate hardships and assist aggrieved parties. Referring to a previous case, the Tribunal directed the Adjudicating Authority to re-examine the issue of adjustment and consider the permissibility of adjusting excess amounts paid against demands for different periods.

4. Citing the principles of justice and fairness, the Tribunal stressed that procedural laws should not overshadow substantive rights. It referred to a Supreme Court case to emphasize the importance of ensuring that procedural laws serve justice and do not obstruct it.

5. The Tribunal concluded by remanding both appeals to the Adjudicating Authority for further examination and disposal, emphasizing the need for the authority to work within the permissible modalities of the law to settle the disputes in both cases.