2023 (8) TMI 744 - AT - Service Tax

Short payment of service tax on works contract service - challans were not in the name of the assessee- appellant - amount inadvertently paid in the partnership firm, however there is no liability of service tax in that firm - demand alongwith interest and penalty - HELD THAT - The mistake of submitting the challans in different service tax registration which pertained to the partnership firm was a bonafide mistake. The appellant, namely Uday Raj Singh is having proprietorship firm in the name of Uday Raj Singh having STC code CATOS1091NSD001 whereas Uday Raj Singh is also having partnership firm as M/s Uday Raj Singh with different STC Code AADFU9316JSD001. The submission of the appellant that he had inadvertently paid the service tax in the code of partnership firm merely because, the name and the address is the same. He has duly accepted this even before the issuance of show cause notice vide his letter dated 29.11.2018. In fact, it was a case where the Department should not have even proceeded to issue the show cause notice and in terms of the circular should sorted the issue at that stage itself. As the partnership firm has no service tax liability and the service tax amount in terms of the show cause notice was already deposited with the Government exchequer, it was not a case of tax evasion. From the contents of the Circular No. 58/7/2023 (F. No. 157/2/2003 CX.4) dated 20.05.2003, it is clear that it refers to the payment of service tax under a wrong accounting code wrong STC Code/ Central Excise registration number and in that event it has been clarified that the assessee shall not be asked to pay the service tax again. In fact on the basic principle, the Government is not entitle to retain that amount, which is liable to be refunded, but unfortunately the application for refund of the appellant has been rejected as being time barred. The adjustment of the amount, which is already with the Revenue is allowed and the present show cause notice is dropped - no penalty under Section 78 of the Act or under Section 77(2) of the Act is leviable on the appellant and also no interest under Section 75 of the Act can be levied - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the challenge against the Order-in-Appeal allowing the appeal filed by the Revenue and setting aside the adjudication order dropping the demand under the show cause notice.

Detailed Summary:

Issue 1: Short payment of service tax on works contract service due to challans not in the name of the appellant.
An audit revealed short payment of service tax on works contract service as challans were not in the name of the appellant. The appellant accepted the observation but claimed it was a mistaken error. However, a show cause notice was issued for four challans bearing a different registration number not connected to the appellant's firm. The appellant requested adjustment of the deposited amount in the correct registration number, citing a bonafide mistake due to similar names and addresses.

Issue 2: Interpretation of circulars and legal precedents regarding adjustment of service tax payments.
The appellant referred to Circular No. 58/7/2023 and legal decisions to support their plea for adjustment of the duty amount. The Adjudicating Authority dropped the proceedings based on the circular's principles. However, the Commissioner (Appeals) distinguished previous cases involving different legal entities and held the circular inapplicable. The Tribunal disagreed, emphasizing the aim of "Ease of Doing Business" and reducing litigation where no malafide intent exists.

Issue 3: Application of legal principles for adjustment of service tax payments under wrong codes.
The judgment cited Trade Notice No. 03/2014-ST, clarifying that in cases of payments under wrong codes, the assessee is not required to pay the tax again. The judgment highlighted that the government should not retain amounts liable for refund. Legal precedents were cited to support the internal adjustment of service tax payments made under incorrect registration numbers of the same assessee.

In conclusion, the Tribunal allowed the adjustment of the amount already with the Revenue, dropping the show cause notice. No penalties or interest were deemed leviable on the appellant. The impugned order was set aside, and the appeal was allowed.