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2016 (1) TMI 344 - AT - Service TaxUtilization of Service Tax, paid by one assessee, by the another assessee after merger between the two - M/s. BPC Projects had merged with M/s. PSP Projects Pvt. Limited on 01.4.2009. Therefore, all the assets and liabilities of M/s. BPC Projects were taken over by M/s. PSP Projects Pvt. Limited. Hence M/s. PSP Projects Pvt. Limited are rightly entitled to avail PLA balance lying with M/s. BPC Projects on 01.4.2009. M/s. PSP Projects Pvt. Limited have paid the service tax liability of M/s. BPC Projects also after 01.4.2009. Learned Consultant contended that they had intimated the department on 26.5.2009 about their intention to utilise the PLA balance lying with M/s. BPC Projects as on 01.4.2009 towards the service tax liability of M/s. PSP Projects Pvt. Limited after 01.4.2009. Held that - Simply because M/s. BPC Projects had not surrendered the service tax registration, it cannot be said that PLA balance lying unutilised was available with M/s. BPC Projects even after 01.4.2009. M/s. PSP Projects Pvt. Limited was the successor and the only legal entity with effect from 01.4.2009 and hence was legally entitled to utilise the said unutilised PLA balance. Hence, we find that the issue herein is only non-observance of procedure of intimation to Range Superintendent etc. and is only a technical violation, if any. Adjustment of service liability allowed - Decide in favor of assessee on merit as well as on limitation.
Issues:
1. Utilization of PLA balance towards service tax liability 2. Validity of the demand of short levy 3. Time limit for raising the demand Analysis: 1. Utilization of PLA balance towards service tax liability: The case involved the merger of M/s. BPC Projects with M/s. PSP Projects Pvt. Limited, where M/s. BPC Projects had a PLA balance of &8377; 5,89,415/- as of 01.4.2009. The appellants intended to set-off this amount against the subsequent monthly liabilities of M/s. PSP Projects Pvt. Limited. The department contended that the appellants were not eligible to utilize this amount towards the service tax liability of M/s. PSP Projects Pvt. Limited. The Tribunal observed that since M/s. BPC Projects merged with M/s. PSP Projects Pvt. Limited, all assets and liabilities automatically vested in the latter. The Tribunal found that the issue was a technical violation of the procedure of intimation to the Range Superintendent, and the appellants had indeed informed the department about the transfer of the unutilized PLA balance. Therefore, the Tribunal held that the utilization of the PLA balance by M/s. PSP Projects Pvt. Limited was legally justified. 2. Validity of the demand of short levy: The department contended that the demand for short levy was proper and sustainable as M/s. BPC Projects did not surrender their service tax registration post-merger and failed to inform the Range Superintendent about the transfer of the PLA balance. However, the Tribunal noted that the demand for short levy was made known only after scrutinizing the Half Yearly Returns for the period April to September 2009. The Tribunal held that the demand made within one year from October 2009 was within the time limit and sustainable. Nonetheless, the Tribunal ultimately found that the demand of short levy was not fair and just, leading to the setting aside of the impugned order of the lower authorities. 3. Time limit for raising the demand: The Tribunal considered the time limit for raising the demand and found that the objection or demand was raised by the department only on 21.10.2010, which the Tribunal deemed as time-barred. Consequently, the Tribunal held that the demand for short levy could not be legally sustained and allowed the appeal in favor of the appellants. In conclusion, the Appellate Tribunal CESTAT AHMEDABAD ruled in favor of the appellants, M/s. PSP Projects Pvt. Limited, stating that the utilization of the PLA balance towards the service tax liability was justified due to the merger with M/s. BPC Projects. The Tribunal found the demand of short levy to be unfair and time-barred, ultimately setting aside the lower authorities' order.
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