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TMI Blog2023 (2) TMI 1311X X X X Extracts X X X X X X X X Extracts X X X X ..... , the service provider-assessee need not take the route of refund of excess tax paid as provided under Section 11B of the Central Excise Act, 1944. The Hon'ble Apex Court in the case of M/s. Birla Corporation Ltd. [ 2005 (7) TMI 104 - SUPREME COURT ] has held that the Revenue cannot take a different stand when the Revenue has accepted the principles laid down in a previous case. The demand cannot sustain and requires to be set aside - Appeal allowed. - Sulekha Beevi C.S., Member (J) And Vasa Seshagiri Rao, Member (T) For the Appellant : Raghavan Ramabadran, Advocate. For the Respondents : M. Ambe, Deputy Commr. (Authorized Representative). ORDER SULEKHA BEEVI C.S., MEMBER (J) 1. Brief facts of the case are that the appellant viz., M/s. Aircel Limited, Coimbatore is a provider of taxable service under the category of Telecommunication Service . They provide telecommunication service to all the subscribers in the areas comprised in the jurisdiction of the State of Tamil Nadu except Chennai City. In respect of the subscribers comprised in the territorial jurisdiction of Chennai City, such service is provided by their associate company viz., M/s. Aircel Cellular Limited (hereinaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Chennai; M/s. ACL is a group company who had licence for providing telecommunication services to subscribers within Chennai only. That from August 2007, the appellant and M/s. ACL had introduced the facility of common recharge for each other's subscribers whereby the appellant and M/s. ACL could sell Recharge Vouchers (RCVs) or Start-Up Kits (SUKs) to subscribers through their respective dealers so as to provide flexibility to their subscribers. To illustrate, the Learned Counsel for the appellant explained that when subscribers of M/s. ACL travel within the telecommunication circle of the appellant, they could recharge or top-up using RCVs sold by the appellant through its dealers and vice versa. The diagrammatic representation of the flow of transaction, as given by the Learned Counsel for the appellant, is as under:- Situation 1 RCV sold by AL. Subscriber of AL buys the RCV and service is provided by AL Situation 2 - Common Recharge Facility RCV sold by AL. Subscriber of ACL buys the RCV and service is provided by ACL 4.2. The Learned Counsel submitted that as Service Tax is liable to be paid on services provided or agreed to be provided, the appellant would remit applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice and Service Tax thereon to person from whom it was received. However, the gross amounts in the instant case were passed on to M/s. ACL and not to the person from whom the amounts representing value of taxable service and Service Tax thereon was received. b. That therefore, the entire case falls beyond the scope of Rule 6(3) of the Service Tax Rules and the appellant was not entitled to the benefit of adjustment. c. That Rule 6(3) was not the proper mechanism for the purpose of adjustment of Service Tax though the appellant herein had paid Service Tax on gross receipts for which no taxable services were provided. 4.5.1. It was urged on behalf of the appellant that the issue has been settled in the case of their associate company M/s. ACL for the period from January 2009 to March 2010 and the same has attained finality. The very same issue as to whether such adjustment can be made under Rule 6(3) was decided in the case of M/s. ACL vide Order-in-Original No. 68/2011 dated 30.11.2011. In the said case, the Adjudicating Authority had set aside the entire demand raised on this issue. In the said case, the Original Authority observed that when the assessee (M/s. ACL) does not provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Commr. of C. Ex., Ghaziabad [2006 (1) S.T.R. 305 (Tri. -Del.)] and Commissioner of Central Excise, Salem v. M/s. SRC Projects Ltd. [2010 (20) S.T.R. 687 (Tri. - Chennai)]. The said case was later affirmed by the Hon'ble jurisdictional High Court as reported in Commissioner v. M/s. SRC Projects Ltd. [2017 (51) S.T.R. 334 (Mad.)] 4.7. He prayed that the entire demand may be set aside and the appeal may be allowed, with consequential benefits. 5.1. The Learned Authorized Representative, Shri M. Ambe, appeared and argued for the Department. The Learned Authorized Representative referred to paragraph 16 of the impugned order, which reads as under:- 16.1 As could be seen from the above, adjustment of the excess paid Service Tax is permissible subject to the presence of the parameters as indicated below: a) The assessee should have paid Service Tax to the credit of the Central Government; b) Service Tax should have been paid in respect of a taxable service, which is not so provided by him either wholly or partially for any reason; c) Adjustment of the excess paid Service Tax should be against the Service Tax liability for the subsequent period; d) The assessee should have refunded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Tamil Nadu except Chennai. The associate company of the appellant, namely, M/s. Aircel Cellular Ltd. (ACL), has obtained licence for providing telecommunication services only in Chennai. When a subscriber of the appellant-company travels to Chennai, he can purchase a recharge card/top-up card from M/s. ACL. While making the purchase, along with the amount, Service Tax is collected by the associate company M/s. ACL. As and when the recharge card is activated by the subscriber, even if he is within Chennai, since he is a subscriber of the appellant-company (M/s. Aircel Ltd.), Service tax is paid by the appellant on the said card. Thus, according to the appellant, there is double payment of Service Tax, by the appellant-company as well as the associate company i.e., M/s. ACL. The nature of the activity and the transaction on which the Service Tax has been collected is explained in the diagrammatic representation provided by the appellant (as reproduced hereinabove at paragraph 4.1 of this order). It is also necessary to state that the present issue is with regard to pre-paid services only and not post-paid services. 8. We have to say that there is no dispute alleged in the Show Caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod, if the assessee has refunded the value of taxable service and service tax thereon to the person from whom it was received. (Emphasis supplied) 11.1. In paragraph 16 of the impugned order, the Adjudicating Authority has discussed this view as to the requirement to refund the consideration along with Service Tax to the end customer in order to claim the benefit of adjustment provided in Rule 6(3). It is observed by the Adjudicating Authority that the gross amounts are being passed to M/s. ACL and not to the person from whom the amounts representing the value of the taxable service and Service Tax thereon were received. It has to be borne in mind that Rule 6(3) provides for an eventuality where tax has been collected and paid to the Government and no service was thereafter provided. In other words, if the service provider collects the consideration for services along with tax and thereafter, for some reason, is not able to provide the said service, can refund the consideration along with tax to the customer. The tax already paid to the Government can be adjusted towards the liability for the subsequent period. By such adjustment, the service provider-assessee need not take the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h other at the end of every month for accounting the income receivable on account of cross-circle purchase and activation of recharge/top up cards wherein the recharge/top up amount relating to a pre-paid subscriber is recognized as income for the home network operator for provision of telephone service. At the end of every month service tax liability is arrived at in the following manner: (a) pay service tax on advance receipts actually received from dealers on supply of common recharge cards, (b) pay service tax on value of services provided and income recognized from activation made during the month on cards sold and tax paid by the associate company but for which payment is now received by way of credit note covering value of services and service tax and (c) reduce the service tax liability for the month on the value of services provided by the associate company on activation of cards sold and tax paid in earlier months by the assessee, for which payment is returned to the associate company by way of issue of credit note covering value of services not provided and applicable service tax. The assessee has therefore, contended that there is no short payment and the payment of ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany at Chennai. Since they have already paid the service tax, the next logical and legal step is refund of tax or adjustment of service tax against the liability for the subsequent period as per Rule 6(3) of Service Tax Rules, 1994. 6.7 It is pertinent to see that the very purpose of introduction of Rule 6(3) i.e. adjustment of service tax, is to provide instant relief to the assessees when services are not provided either wholly or partially for any reason. The condition prescribed therein i. e. refund of the value along with service tax to the customer, is to ensure that there is no unjust enrichment by the assessee. In the present case, there is no dispute that the assessee has credited the service charges along with the service tax to their associate company who provided the service. By transferring the amount along with service tax to their associate company, the assessee has satisfied the unjust enrichment concept inbuilt under Section 11B of Service Tax Rules, 1994. As the purpose and object of the provisions of Rule 6(3) are satisfied, there is no justification in denying the self adjustment facility. 6.8 It is well settled law that the principles of reasonable construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er decision of this Court, held that the department having accepted the principles laid down in the earlier case cannot be permitted to take a contra stand in the subsequent cases. In Paragraph 5 of the said judgment it was observed, thus: In the instant case the same question arises for consideration and the facts are almost identical. We cannot permit the Revenue to take a different stand in this case. The earlier appeal involving identical issue was not pressed and was therefore, dismissed. The respondent having taken a conscious decision to accept the principles laid down in Pepsico India Holdings Ltd. (supra) cannot be permitted to take the opposite stand in this case. If we were to permit them to do so, the law will be in a state of confusion and will place the authorities as well as the assessees in a quandary. 7. Since the point involved in the present case is identical to the point decided in the Hindustan Gas Industries case (supra) and the department having accepted the principle laid therein to the effect that the inserts did not require any precision machining or that any such machining was done by the appellant, cannot be permitted to take a stand different than the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of confusion and will place the authorities as well as the assessees in a quandary. 12. The principle in Birla Corporation Ltd. (supra) is being followed consistently. 13. Since admittedly the point involved in the present case is identical to the point involved in Sulzer's case (supra) and the department having accepted the principle laid down therein, the department cannot be permitted to take a different stand in the present appeals. 13. The Learned Authorized Representative for the Department has not been able to counter the submission made by the Learned Counsel for the appellant that the Department has not appealed against the Order-in-Original dated 30.11.2011 passed in the case of the associate-company viz. M/s. ACL. We, therefore, have to hold that the issue being identical, is squarely applicable to the case before us. 14. From the discussions made above, after appreciating the facts, evidence and following the decisions, we find that the demand cannot sustain and requires to be set aside, which we hereby do. 15. In the result, the impugned order is set aside. 16. The appeal is allowed with consequential reliefs, if any. (Order pronounced in the open court on 09.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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