2015 (10) TMI 2037 - AT - Service Tax

Deposit of service tax with wrong registration number of other unit Rectification of incorrect registration number mentioned in challan of a different unit Assessee requested to count the amount of service tax deposited towards the other unit Held That - In this case, the Assistant Commissioner, Service Tax in charge of the appellant s Mumbai unit has categorically mentioned that the impugned amount of service tax (Rs.25 lakhs) deposited has not been utilised towards paying service tax by the Bombay unit. - in the case of KK Kedia 2014 (10) TMI 602 - CESTAT NEW DELHI CESTAT, in effect, has held that such adjustment can be permitted The CESTAT judgement in the case of Plastichemix Industries 2015 (10) TMI 2036 - CESTAT AHMEDABAD makes a summary observation that there is no provision under the present service tax law for adjustment of service tax payments from the account of one registered unit to the account of another registered unit. It however does not say that there is any provision in the service tax law which prohibits such adjustment. Issue is not so much in law but it is just a case of wrong registration number with no malafide intention of the assessee as same was brought to Revenue s notice by assessee himself No short or delayed payment on part of assessee Commissionerate of Cochin issued a Trade Notice No. 3/2014 60 squarely covers the issue - Impugned order is set aside in favour of assessee.

Summary

Issues:
- Appeal against service tax demand confirmation of Rs. 25 lakhs, interest, and penalties.
- Permissibility of adjustment of service tax payment from one registered unit to another.
- Conflicting decisions regarding such adjustments by different CESTAT benches.
- Application of Trade Notice No. 3/2014/ST for rectification of mistakes in service tax payments.
- Absence of mala fide intent in the mistake and the appellant's proactive approach in rectifying the error.
- Applicability of CBEC Circular dated 20.05.2013 on penalties and interest.

Analysis:
1. The appeal was filed against the confirmation of a service tax demand of Rs. 25 lakhs, interest, and penalties by the Order-in-Appeal, which upheld the Order-in-Original. The appellant, a trader with units in NOIDA and Mumbai, mistakenly deposited the amount under the Mumbai unit's registration instead of the NOIDA unit. The request for adjustment was denied, leading to the issuance of a Show Cause Notice and subsequent confirmation of the demand.

2. The central issue revolved around the permissibility of adjusting service tax payments from one registered unit to another. The conflicting decisions by different CESTAT benches further complicated the matter, prompting the matter to be referred to a Larger Bench. The appellant cited Trade Notice No. 3/2014/ST, which outlined a procedure for rectifying such mistakes, supporting their argument for adjustment.

3. During the hearing, the appellant presented evidence of the mistake being detected promptly and brought to the attention of the authorities. The Departmental Representative argued against adjustment, citing the absence of centralized registration for the appellant. However, the Tribunal noted that the mistake was inadvertent, with no mala fide intent, and that the appellant had taken proactive steps to rectify the error.

4. The Tribunal analyzed the legal aspects and observed that while one CESTAT judgment allowed for such adjustments, another held them impermissible due to the absence of a specific provision in the service tax law. However, the Tribunal emphasized that rectifying genuine mistakes should not be hindered by legal technicalities, especially when supported by a relevant trade notice outlining the rectification procedure.

5. Ultimately, the Tribunal set aside the impugned order, allowing the appeal and remanding the case to the primary adjudicating authority. The direction was given to adjust the amount of Rs. 25 lakhs in accordance with the procedure outlined in the Cochin Commissionerate Trade Notice dated 10.07.2014, emphasizing the importance of rectifying mistakes without penalizing genuine efforts to correct errors promptly.