2014 (2) TMI 1127 - AT - Service Tax

Waiver of service tax - Adjustment of Excess tax paid - Held that - there is no provision under the Finance Act or under Service Tax Rules which provides such adjustment. The adjustment is provided only under Rule 6(3) of Service Tax Rules where the taxable service was not provided. In the present case applicant provided service and short paid the tax. In these circumstances, I find that applicant has not made out a total waiver of the amount of service tax - Conditional stay granted.

Summary

Issues:
Waiver of service tax penalty based on excess amount paid and financial hardship.

Analysis:
The case involved an application for the waiver of service tax penalty amounting to Rs.8,22,636 for the period from April 2006 to September 2006 and October 2006 to March 2007. The applicant contended that they had actually paid an excess amount of service tax for the same period and had adjusted the short paid amount. They further argued financial hardship and significant losses. However, the revenue department, relying on the lower authorities' findings, argued that there was no provision in the Finance Act or Service Tax Rules allowing for such adjustments against excess payments.

The presiding judge noted that the applicant had indeed short paid the service tax in question. It was highlighted that neither the Finance Act nor the Service Tax Rules provided for adjustments in cases where the taxable service was actually provided but the tax was short paid. The judge emphasized that the provision for adjustment was only available under Rule 6(3) of the Service Tax Rules for situations where the taxable service was not provided. Consequently, the judge concluded that the applicant had not sufficiently demonstrated grounds for a complete waiver of the service tax amount.

Considering the circumstances of the case, the judge directed the applicant to deposit a reduced amount of Rs.4 lakhs within six weeks from the date of the judgment. Upon the deposit of this specified amount, the pre-deposit requirement for the remaining service tax amount would be waived. The judge set a deadline for compliance and instructed that the same be reported by a specific date. This decision balanced the applicant's financial situation with the legal requirements regarding service tax payments, providing a pragmatic resolution to the issue at hand.