2023 (4) TMI 1021 - AT - Service Tax

Short payment of Service tax or not - provisional payment of service tax - BSNL had already registered for centralized billing and accounting system - demand of short paid service tax alongwith interest and penalty - HELD THAT - The appellant has centralized billing and accounting system even prior to the introduction of the service tax in 1994 and they were registered with the department. Further, the appellant have taken permission from the department for provisional payment of service tax which was granted by the department upto the month of March 2007. It is an admitted fact that when the payment is made on provisional basis the amount sometime is paid in excess and sometime it may be less. The appellant has submitted the copy of the chart showing the payment made in excess during the relevant period which clearly shows that the appellant had adjusted the excess amount paid in a particular month against the liability of the subsequent month. The revenue has neither objected over the adjustment made from time to time nor advised the appellant any requirement of the rules. The department itself advised to the appellant that there is no need of having centralized registration when they already have centralized billing and accounting of payment system. Further, in the appellant s own case for the subsequent period, the Commissioner (appeals) has allowed the appeal of the appellant by setting aside the order passed by the lower authorities on the same facts and the department has not filed any appeal against the same and the orders of the Commissioner in the appellant s own case has attainted finality. Besides this, the Tribunal has also consistently held in favour of the assessee in the orders relied upon by the appellant. Demand of interest and penalty - HELD THAT - When the demand of tax itself is not sustainable, the demand of interest and imposition of penalty does not survive. Appeal allowed.

Issues involved: Appeal against order confirming service tax demand, interest, and penalty under the Finance Act, 1994.

Summary:
The appellant, a public sector undertaking providing taxable services, appealed against the Commissioner's order confirming the demand of service tax, interest, and penalty. The appellant had a centralized billing and accounting system before 1994 and had permission for provisional payment of service tax until March 2007. The appellant made excess payments, which were adjusted in subsequent months, resulting in no short payment during the disputed period. The appellant argued that the impugned order did not appreciate the facts and legal precedents, including the appellant's own case where similar issues were decided in their favor. The appellant provided evidence of excess payments and adjustments, citing various letters and judicial decisions supporting their position.

Upon hearing both parties and reviewing the records, the Tribunal found that the appellant had a centralized billing system before the introduction of service tax and had permission for provisional payment until March 2007. The Tribunal noted that the appellant's adjustments of excess payments did not result in revenue loss to the department or undue advantage to the appellant. The Tribunal also observed that the revenue did not object to the adjustments and advised against centralized registration when the billing system was already centralized. Additionally, the Tribunal highlighted that in the appellant's own case for a subsequent period, the Commissioner had allowed the appeal, and no appeal was filed by the department, making the orders final. Citing consistent decisions in favor of the assessee, the Tribunal concluded that the impugned order was not sustainable in law and set it aside, allowing the appellant's appeal. Consequently, the demand for interest and penalty was deemed not sustainable when the tax demand itself was not upheld.

The appeal was allowed, and the impugned order was set aside on 20.04.2023.

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