2014 (6) TMI 768 - AT - Service Tax

Adjustment of excess payment of service tax - CENVAT Credit - Held that - if during a particular month there is excess payment of tax, it does not mean that the excess paid amount had been recovered from the customers as the service tax has been paid on the estimated bill collection amount and the exact amount of service tax payable is determined only when the accurate figures of collection against the bills are available. When this is the position, there is no reason why the excess payment against a particular month cannot be adjusted against short payment during the other months, as there is no unjust enrichment involved. - Decided in favour of assessee. Regarding Cenvat Credit - Held that - the bulk of the Cenvat credit is in respect of the service tax paid on the services of repair and maintenance, security, sales and advertisement, installation and commissioning, rent a cab service, air travel agents and rail travel agents etc. received by them all of which are covered by the definition of input service and, therefore, there is absolutely no reason for denying the Cenvat credit in respect of the same - Credit allowed - decided in favor of assessee.

Summary

Issues involved:
Service tax demand for May 2005, adjustment of excess payment against short payment, Cenvat credit demand for various services and goods, applicability of Rule 6(3) of Service Tax Rules, 1994, interpretation of input services.

Analysis:

Service tax demand for May 2005:
The appellant, a Government-owned company providing telecom services, faced a service tax demand for May 2005 due to alleged short payment. However, the appellant argued that excess payments made in other months should offset this demand. The Tribunal agreed, noting that service tax is paid based on estimated bill collections, leading to discrepancies. The excess payment in one month should be allowed to adjust against short payments in other months, preventing unjust enrichment. Consequently, the service tax demand for May 2005 was deemed unsustainable, and the appeal by the appellant was allowed.

Cenvat credit demand:
Regarding the Cenvat credit demand of Rs. 5,44,691, the appellant had availed credit for various services like repair, maintenance, security, sales, advertisement, and goods received from a specific supplier. The Tribunal found that these services fell within the definition of 'input services,' justifying the Cenvat credit. Additionally, as there was no dispute regarding the receipt of goods from the supplier, denying the Cenvat credit was deemed unwarranted. Therefore, the Commissioner's decision to set aside the Cenvat credit demand was upheld.

Applicability of Rule 6(3) of Service Tax Rules, 1994:
The appellant sought to use Rule 6(3) to adjust excess service tax payments against short payments. The Department argued that this rule was inapplicable for such adjustments. The Tribunal concurred, stating that Rule 6(3) pertains to situations where service tax is paid but the service is not fully provided, not for adjusting excess payments against short payments. This ruling supported the appellant's contention that excess payments in certain months should offset short payments in others.

In conclusion, the Tribunal allowed the appeal by the appellant, M/s Bharat Sanchar Nigam Limited, concerning the service tax demand for May 2005 and upheld the decision to set aside the Cenvat credit demand. The appeal by the Revenue was dismissed based on the detailed analysis and interpretation of relevant legal provisions and definitions of input services.