2016 (6) TMI 239 - AT - Service Tax

Short payment of Service tax in the month of July, 2011 due to the adjustment of service tax paid in excess in the month of May, 2011 - Erection and Commissioning, Maintenance and repair, BAS, GTA, Consulting Engineer, Sponsorship services etc. - Held that - it is a well settled legal principle that the statue should be interpreted as it is even if the intention is imperfect, imprecise or there is an obvious omission. Even though the appellants have not specifically intimated the department in this regard, but adjustment was declared in their ST3 returns, accordingly intimation of such adjustment stands made to the department. Even if it is not adhered to, at the most it is a procedural lapse and merely for this procedural lapse the excess amount paid could not be deviated and cannot be permitted to be retained by the government. Section 13 of the General Clauses Act, 1897 provides that singular include the plural. Accordingly, month includes months. Further the various case laws relied on by the appellants are squarely applicable to the facts of the present case. The excess amount paid in the month of May, 2011 adjusted by the appellants in the subsequent months tax liability is absolutely in order. Therefore, invoking Section 73(1) for a non-existing short payment is not sustainable. - Decided in favour of appellant with consequential relief

Summary

Issues:
1. Whether the appellant short paid service tax by adjusting excess payment made in a subsequent month?

Analysis:

Issue 1:
The appellant, engaged in manufacturing and providing services, received a Show Cause Notice proposing service tax demand, interest, and penalty. The adjudicating authority confirmed the demands and imposed penalty under Section 76 of the Finance Act, 1994. The appellant appealed to the Ld. Commissioner (Appeals), who rejected the appeal, leading to the present appeal before the Tribunal.

Issue 1 - Detailed Analysis:
The appellant argued that the error in payment was due to being a centrally registered taxpayer, which delayed the detection of excess payment made in May 2011, adjusted against the tax liabilities for July 2011. The appellant relied on Rule 6(4A) of Service Tax Rules, allowing re-credit in the succeeding month. The appellant contended that the short payment in July 2011 was due to the adjustment of excess tax paid in May 2011, asserting it was illusory and not real, thus Section 73(1) could not be invoked. The appellant cited case laws supporting their stance. The appellant emphasized that non-observance of the procedure should not deny adjustment against subsequent tax liabilities.

The Revenue argued that the adjustment was not made in the succeeding month, as required by Rule 6(1A) of the Service Tax Rules. The Revenue contended that the adjustment made by the appellant was not in order and could not be considered as payment for July 2011, making the demands sustainable.

After hearing both sides, the Tribunal analyzed the issue. It was observed that the adjustment was not in strict compliance with Rule 6(4A) but was made known through the ST3 returns, constituting intimation to the department. The Tribunal noted that the excess payment adjustment in subsequent months was permissible, as per the legal principle of interpreting statutes. The Tribunal referenced Section 13 of the General Clauses Act, 1897, stating that "month" includes months. The Tribunal found the case laws cited by the appellant applicable, settling the issue in favor of the appellant.

In conclusion, the Tribunal held that the excess payment adjustment by the appellant in subsequent months was valid. The invocation of Section 73(1) for a non-existing short payment was deemed unsustainable. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief as per the law.