2017 (4) TMI 753 - AT - Service Tax

Suo motu adjustment of tax - the payment of excess service tax paid had been adjusted by the appellant for future payment - Held that - during the relevant period i.e. April, 2006 to September, 2006, there is no bar of excess service tax paid by the appellant for adjustment. The only reason of denial of the adjustment by the ld. Commissioner (Appeals) is that as per amendment in Service Tax Rules w.e.f. 1-3-2007, such adjustment is not permissible. Admittedly, these rules have come into force after the impugned period. Therefore, such amendment to the rules is not applicable to the facts of this case. Appeal allowed - decided in favor of assessee.

Summary

Issues:
Adjustment of excess service tax paid for future payment denied by Commissioner (Appeals).

Analysis:
The appellant inadvertently paid excess service tax during a specific period on services rendered to a charitable institution under the Central Government. The appellant sought to adjust this excess payment against future service tax liabilities. The lower authorities denied this self-adjustment, leading to the appellant's appeal. The Tribunal noted that during the subsequent period, there was no bar on adjusting excess service tax paid. The Tribunal held that the appellant was entitled to adjust the excess payment, as it was not payable for the services provided. The Tribunal emphasized that the denial of adjustment by the Commissioner (Appeals) was based on an amendment in Service Tax Rules introduced after the relevant period. Since the rules were not applicable during the appellant's period, the Tribunal concluded that the appellant's adjustment was valid. Consequently, the Tribunal set aside the impugned order and allowed the appeal with any consequential relief.

This judgment highlights the importance of considering the relevant legal provisions in force during the period in question when determining the validity of actions taken by taxpayers. It underscores that retrospective application of amended rules may not be permissible, and adjustments made in accordance with the rules applicable at the time should be upheld. The decision provides clarity on the scope of adjustments for excess tax payments and serves as a reminder for tax authorities to apply the law in a manner consistent with the legal framework existing at the relevant time.