2013 (2) TMI 300 - AT - Service Tax

Adjustment of excess payment of Service Tax Whether adjustment of excess payment can be made without it refunded to customer Assessee made excess payment of service tax during the period April 2005-Sep.2005 Assessee adjusted this amount during Oct. 2005-Mar.2006 under Rule 6(4A) of STR ,1994 without submitting any documentary evidence Assessee has not shown that the amount alleged to have been excess paid, and whose adjustment is sought, had been refunded to the customers Held that - Regional office, at Delhi which had obtained centralized registration, was discharging service tax liability on behalf of all their branches within this region This registration has to be treated as centralized registration under Rule 4 (2) of Service Tax Rules, 1994. Therefore Rule 6(4A) of STR ,1994 would be applicable and Rule 6(3) would not be applicable order is set aside and the matter is remanded to the Commissioner (Appeals) for de novo decision Adjustment allowed In favor of assessee.

Summary

Issues:
1. Interpretation of Rule 6(3) and Rule 6(4A) of the Service Tax Rules, 1994.
2. Application of centralized registration under Rule 4(2) in service tax liability adjustment.
3. Excess service tax payment adjustment against subsequent tax liability.

Analysis:
1. The case involved a Public Sector Bank providing banking services facing a service tax demand due to an alleged short payment of service tax amounting to Rs. 13,95,399/- for the period from December 2005 to January 2006. The dispute arose from the adjustment of excess service tax paid during April 2005 to September 2005 against the subsequent tax liability under Rule 6(4A) of the Service Tax Rules, 1994. The Jurisdictional Additional Commissioner confirmed the demand and imposed penalties, leading to an appeal before the Commissioner (Appeals) and subsequently to the present appeal.

2. The appellant contended that their regional office in Delhi had centralized registration under Rule 4(2) of the Service Tax Rules, making them eligible for adjustment under Rule 6(4A) without the need to refund the excess amount to customers. The appellant argued that the excess service tax payment was correctly adjusted against the subsequent tax liability, contrary to the findings of the lower authorities. On the other hand, the Departmental Representative emphasized the lack of evidence regarding centralized registration and the failure to satisfy the conditions of Rule 6(3) for adjustment.

3. The Appellate Tribunal, after hearing both sides, observed that Rule 6(3) requires evidence of refunding excess amount to customers for adjustment, whereas Rule 6(4A) allows adjustment without such refund in cases of centralized registration. The Tribunal noted that the appellant's claim of centralized registration had not been adequately considered in the impugned order. Considering this, the Tribunal set aside the order and remanded the matter to the Commissioner (Appeals) for a fresh decision, instructing a thorough examination of the appellant's eligibility under Rule 6(4A) and the claimed excess service tax payment during the specified period.

This judgment clarifies the distinction between Rule 6(3) and Rule 6(4A) regarding service tax adjustment, emphasizing the relevance of centralized registration in such cases. The decision highlights the importance of proper consideration of factual claims and legal provisions in tax liability disputes, ensuring a fair and accurate resolution based on the specific circumstances of each case.