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TMI Blog2022 (3) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the gross amounts received during the taxing period. Service Tax when introduced followed the receipt based accounting system for levy and collection of tax. The assessee was obliged to pay the taxes on the basis of the gross amounts received during the taxing period. - the entire issue is because of the change in the manner of accounting of the transaction for the purpose of computation of service tax liability from the accrual basis to the receipt basis. The issue needs to be adjudged in the favour of appellant - appeal allowed - decided in favor of appellant. - Service Tax Appeal No. 87447 of 2016 - FINAL ORDER NO. A/85182/2022 - Dated:- 22-2-2022 - MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) Shri Ashok Nawal, Chartered Accountant, for the Appellant Shri Dilip Shinde, Assistant Commissioner, Authorised Representative for the Respondent ORDER This appeal is directed against the order in appeal No PUN- EXCUS-001-APP-097-16-17 dated 25.07.2016 of the Commissioner (Appeals), Central Excise, Pune. By the impugned order, the Commissioner (Appeals) has upheld the Order in original No P1/ADC/ST/59/2014 dated 31.03.2014 of the Additional Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service Tax of liability @ 10.30% Rs. Paid vide GAR- 7 Challan No. and date Amount paid Rs Remarks 1 April 11 to Sept. 11 237647 48/= 2447769/- 69103331010 201150084 Dt. 10/10/2011 2447769/- No default 2 Oct. 11 To Marc h 12 511401 14/- 5267431/ = 69103331010 201150084 Dt. 10/10/2011 69103332903 201251153 Dt 29/3/2012 69103332903 201251188 Dt.29/3/2012 2447769/- 2014049/- 192691/- Short paid Rs. 2447769/- + 6,12,922/- Total Rs. 46,54,509/- 30,60,691/- 2.3 Hence, SCN dated 04.04.2013 was issued for recovery of the short paid service tax. 2.4 This show cause notice was adjudged by the Additional Commissioner as per the order in or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequent adjustment. Appellant further submits that, due to calculations mistake during the period Oct 11 to March 12, they have inadvertently short paid amount of ₹ 18,85,237/-. Thereafter, Appellant voluntarily paid the said amount on 03/05/2012 and subsequently Appellant also deposited the interest of ₹ 1,10,157/- vide Challan No. 50150 dated 20/12/2012 for the late payment in payment of Service Tax They rely on following judicial pronouncements. a. Rajdeep Buildcon Pvt Ltd. [2011 (21) STR 663 (T- Mum)] b. General Manager, Bharat Sanchar Nigam Ltd. [2016 (41) S.T.R. 475 (Tri. Del c. Chola Business Services Ltd. [2017 (47) S.T.R. 192 (Tri. - Chennai)] d. Cherry Hill Interiors Ltd. [2016 (42) S.T.R. 74 (Tri. - Del.)] e. Dell India Pvt. Ltd. [2016 (42) S.T.R. 273 (Tri. - Bang.)] f. Nirma Architects Valuers [2006 (1) S.T.R. 305 (Tri. - Del.)] g. State Bank Of Hyderabad 2016 (43) S.T.R. 415 (Tri. Hyd h. Telecom District Manager, Bsnl [2017 (47) S.T.R. 282 (Tri. - Del.)] i. Garima Associates [2015 (40) S.T.R. 247 (Tri. - Mumbai)] j. L T Sargent Lundy Limited [2016 (43) S.T.R. 249 (Tri. - Ahmd.)] k. Powerce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 (43) STR 415 Tri. Hyderabad). In these cases there was no dispute regarding excess payment the adjustment was reflected in the tax returns submitted by the assessee. Whereas in the present case, the dispute is regarding adjustment of excess payment of service tax as claimed by the appellant, however, the same has not been reflected / shown by the appellant in their ST-3 returns of the relevant period. Telecom District Manager, BSNL (2017 (47) STR 282 Tri.- Delhi). In this case, there is no discussion on the applicability of Rule 6 (4A). Moreover, there was no dispute regarding excess payment. The tribunal had relied on the decision in the case of Powercell Battery [2010 (19) STR 400 Tri. - Bangalore) wherein the period involved was April 2006 to September 2006 and the revenue had contended that the adjustment facility was not available to the assessee before 01.03.2007. Thus, the issue involved was different from the present case. Dahej Hardware Infrastructure Ltd. [2011 (24) STR 676 Tri. - Bangalore] It is a case of advance payment (covered under Rule 6(3), and not adjustment of excess payment of tax under Rule 6(4A). The matter was remanded with direction that asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the date of receipt of such information of payment. Explanation.1- For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the [Central Excise Officer], but for this sub-section. Explanation 2. - For the removal of doubts, it is hereby declared that no penalty under any of the provisions of this Act or the rules made thereunder shall be imposed in respect of payment of service tax under this sub-section and interest thereon. Admittedly in the present case the amount short paid by the appellant during the period October 2011 to March 2012, was made good by the appellant themselves on 03.05.2012. They also paid the interest due on the amount so short paid. Having done so, in my the appellant should have been allowed the benefit of the provisions contained in Section 73 (3) of the Finance Act, 1994 and no proceeding albeit for confirmation of the demand against the appellant and for imposition of penalty could have been initiated. 4.5 In respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the succeeding month or quarter, as the case may be. Further, I find that such adjustment are subject to the conditions laid down in Sub Rule 4B of Rule 6 of STR, which states that the adjustment of excess amount paid, under sub-rule (4A), shall be subject to the condition that the excess amount paid is on account of reasons not involving interpretation of law, taxability, valuation or applicability of any exemption notification. From the submissions of the Appellant, I find that the reasons stated for the excess payment, as claimed, is that at the time of making the Service Tax calculations for the initial period, they were having confusion about the mode and manner of calculation of the Service Tax liability as the levy was newly introduced w.e.f. 22.06.2010 and for the purpose of Filling the return and payment of Service Tax they calculated the Gross Amount Received in money equal to the gross amount of the agreements entered during the relevant period ie. from October 2010 to March 2011; that they were not clear about the provisions of the complex taxing statutes as being a partnership firm not having skilled manpower, who are well aware of the complex provisions of Service Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the date when the document relating to the transaction are prepared. To explain central excise duty, VAT or any other indirect tax becomes payable immediately when the invoices covering the goods is prepared. Another system of accounting is on the basis of the receipt. In this system transaction is accounted in the book of account on the date when the payments are receipt for the transactions made in goods and services. Service Tax when introduced followed the receipt based accounting system for levy and collection of tax. The assessee was obliged to pay the taxes on the basis of the gross amounts received during the taxing period. 4.8 On page 39 of the appeal paper book, ST-3 return filed by the appellant for the period October 2010 to March 2011 is available. At F. Value of taxable Service tax payable and gross amount charged (all figures in rupees) for service provider. , is indicated. In the table against, Total gross Amount received in money, against the service provided appellant has indicated ₹ 43,655,609/- and have determined his service tax liability on the basis of this taxable value so computed. On page 45, is Annexure B, giving the details of all the 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t value. 4.11 Thus the entire issue is because of the change in the manner of accounting of the transaction for the purpose of computation of service tax liability from the accrual basis to the receipt basis. In my view the issue is in any way connected to any of the exclusion clause viz involving interpretation of law, taxability, valuation or applicability of any exemption notification . It is also on record that the appellants have intimated the concerned authorities about the adjustment made by them vide their letter dated 28.01.2013. Though it can be argued that stricter compliance with the rule 6(4A) would have required that this intimation should have been made within fifteen days of the adjustment, I am of the view that such procedural lapse in making the intimation a few days later should not be the reason for allowing the substantial benefit available to appellant. I am supported in my view by the decisions in the cases as follows: Garima Associates [2015 (40) S.T.R. 247 (Tri. - Mumbai)] 6. I find that appellant admittedly paid the excess amount of ₹ 2,57,205/- towards service tax in the quarter ending December, 2009. The adjudicating authority al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have denied the adjustment only on the ground that the case of the appellant is covered under Rule 6(4A) and not under 6(1A) and in terms of Rule 6(4A) the adjustment is allowed only for ₹ 1,00,000/- whereas I observed that the appellant throughout from the date of show cause notice maintained that claim for adjustment is under Rule 6(4A). From the fact that the appellant have paid service tax in excess to the tune of ₹ 2,57,205/- in the quarter ending Dec, 2009, therefore the said amount is nothing but advance payment of service tax and as discussed above the condition provided in Rule 6(1A) stand complied with as both the requirements stand fulfilled by way of communication in the form ST3 returns to the department, even if the procedure was not scrupulously followed. Merely for non-observance of the procedure laid down in the rule cannot be made reason for denial of adjustment. I am of the considered view that intention of the rule is very clear that whatsoever excess amount was paid in advance, the same should be adjusted against forth coming tax liability and if it is not allowed it will amount that Government will unjustly enriched with excess amount which cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id in March but their request has not even been considered by the lower authorities since lower authorities have taken a view that assessee did not produce documentary evidence to show that there was excess payment in the month of March, 2008. According to Section 72 of Finance Act, 1994 when a person liable to pay service tax fails to assess the tax in accordance with the provisions, the Central Excise officers can ask the person to produce the accounts, documents or other evidence, as he may deem necessary and after taking into account all the relevant material has to make an assessment order. When the assessee replied to Superintendent of Service tax on 11-3-2009 stating that service tax payable in the month of March, 2008 was actually less than what was paid, the assessing officer could have called for the documents and other evidence which he needed to verify to confirm the claim. Instead of doing this, the assessee was straightway issued a show cause notice. In fact, in this case even though assessee claimed that they have made wrong assessment, the assessing officer failed to act according to Section 72 of Finance Act, 1994, which requires him to make an assessment when ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of failure to pay service tax. Hence the penalty imposed under Section 76 is set aside. 2. As regards the penalty of ₹ 1,000/- imposed under Section 77, the learned consultant states that the appellants are not pressing their appeal. Hence the same is confirmed. The appeal is partly allowed in the above terms. The judgments relied upon by the Revenue in the case of Rishi Shipping v. Commissioner of Central Excise, Rajkot [2014 (33) S.T.R. 595 (Tri.-Ahmd.)] which was followed by Hon ble Apex Court judgment in case of CCE, New Delhi v. Hari Chand Shri. Gopal [2010 (260) E.L.T. 3 (S.C.)]. I am of the view that the case of Rishi Shipping (supra) is related to the adjustment of excess amount in terms of Rule 6(4A) where limit is only ₹ 1 lakh whereas in the present case appellant claimed that adjustment is in terms of Rule 6(1A) therefore the said judgment is not applicable. As per my above discussion, I am of the considered view that as per the facts, appellant s case is covered by Rule 6(1A) of Service Tax Rules, 1994 according to which the adjustment of advance payment is permissible against service tax liability in the subsequent period without any limit of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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