TMI Blog2023 (5) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made by the appellants and the Chartered Accountants Certificate. He proceeds only on the premise that the appellant has violated the provision of Rule 6 (3) of STR, 1994 - it is found that the adjudicating authority did not counter or negate the claims and submissions of the appellants. Not even a single piece of evidence has been adduced to show that the appellants have in fact violated the provisions of Rule 6 (3) of STR, 1994. Except for making a bald averment that the appellants have violated the provisions of Rule 6 (3) of STR, 1994, no other discussion is made to show as to how the conclusions were drawn. The appellant can adjust the service tax excess paid against his service tax liability for the succeeding month or quarter; sub-Rule 4A of Rule 6 of STR starts with a non-obstante clause and, therefore, the procedure prescribed for the earlier rules, if any, are not applicable in the instant case; the appellant is eligible to avail the provisions of Rule 6 (4A) of STR, 1994. The fact that the appellant has made good the service tax short paid by them, along with interest, is not refuted either in the SCN or the impugned order. Therefore, there is considerable force ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 26.05.2008 explained that the excess payment made in the month of June and July was adjusted in the returns for the months of August and September. The appellant explained to the Department giving month wise details of adjustments on account of short payment/excess payment in April to September 2007. It appeared to the Department that such adjustment under Rule 6 (3) of STR is permissible only when the appellant has paid service tax for a taxable service which was not provided wholly or partially and when the appellant refunds the consideration received to his customers before making adjustment of excess paid service tax; despite the explanation given by the appellant vide letter dated 20.03.2009, a SCN dated 24.04.2009 was issued to the appellant seeking to recover the service tax of Rs. 1,58,52,669/- alleged to have been wrongly adjusted by the appellant along with interest and penalty; Adjudicating authority vide the impugned order has confirmed the demand and imposed the penalty of Rs. 1,60,00,000/- on the appellant. 3. Shri R.P. Jindal, learned counsel for the appellant submits that the present case is a result of incorrect filing of the entries in the ST-3 returns by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke shown such adjustment under the Column 4A (I) (a) (iii) of the ST-3 return; they have made good the service tax short paid along with interest; they are entitled to make such adjustments in terms of Rule 6 (4A) of STR, 2004. We find that the appellant submits that the mistake of short or excess payment has occurred due to the newly introduced Works Contract Service. On going through the records of the case and the reconciliation statements submitted by the appellant, it is clear that the appellant has certainly short paid service tax in initial months of April, August and September and excess paid in the months of May, June and July. On reconciliation they have paid the service tax liability along with interest and reflected the same in the returns for the period October 2007 to March 2008. We find that the adjudicating authority simply goes by the show cause notice and bases his confirmation of service Tax on the appellants on the entries made in the ST-3 returns, referring to Rule 6(3) of STR. Adjudicating authority finds as follows :- 35. I find in the above SCN that the assessee has wrongly adjusted Rs. 1,58,52,669/- (1,53,59,607+3,07,187+1,85,875) in contravention of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, or received any payment, against a service to be provided which is not so provided by him either wholly or partially for any reason, [or where the amount of invoice is renegotiated due to deficient provision of service, or any terms contained in a contract] the assessee may take the credit of such excess service tax paid by him, if the assessee - (a) has refunded the payment or part thereof, so received for the service provided to the person from whom it was received; or] (b) has issued a credit note for the value of the service not so provided to the person to whom such an invoice had been issued. 6 (4A) Notwithstanding anything contained in sub-rule (4), where an assessee has paid to the credit of Central Government any amount in excess of the amount required to be paid towards service tax liability for a month or quarter, as the case may be, the assessee may adjust such excess amount paid by him against his service tax liability for the succeeding month or quarter, as the case may be . 9. In view of the above position, we find that the appellant can adjust the service tax excess paid against his service tax liability for the succeeding month or quarter; sub-Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in the subsequent months tax liability is absolutely in order. Therefore, invoking Section 73(1) for a non-existing 'short-payment' is not sustainable. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief, if any, in accordance with law . 10.1 Tribunal in the case of Dell India Pvt. Ltd. versus Commissioner of Service Tax, Bangalore [ 2016 (42) S.T.R. 273 (Tri. Bang.)] has observed that:- 5.1 Here moot issue is whether the assessee can make claim for the excess payment made to the exchequer; if they can claim, whether they can claim this excess payment by way of refund for which there are separate provisions under the law of Service Tax or they could get this claim by way of making adjustment as provided under Service Tax Rules 1994, where relevant provisions could be Rule 6(3), Rule 6(4A), Rule 6(4B) and Rule 6(1A) of the said Rules (supra). 5.2 Revenue has argued that appellant's case cannot be covered under above quoted Service Tax provisions of 1994 and it was imperative on the part of the appellants to file refund claim within the prescribed limit as per the provisions of law of Service Tax. 6. After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT, Delhi has inter alia held that regarding adjustment against tax liability during other months amount to collection of tax without authority of law contrary to Article 265 of the Constitution of India. Consequently, I am of the considered view that this adjustment of excess payment of service tax, considering the facts on record is admissible to the appellant and more so when we consider the combined effect of the relevant provisions of Service Tax Rules, 1994 quoted above. The CESTAT, New Delhi's decision quoted above in this regard has discussed various provisions of Service Tax Rules, 1994. This discussion make the position more clear for the purpose of present facts. Here to have more clarity, the following is quoted from this decision :- 7.1 Thus sub-rule (4A) read with Rule (4B) (of Service Tax Rules, 1994) would apply to a situation where an assessee on account of his inability to correctly determine the amount received during a particular month for the service provided, has paid service tax on the basis of his estimation and subsequently, when the exact amount received during the month, has been determined, the amount of service tax paid on the estimation basis is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC, Mumbai reported in 2006 (202) 561 (S.C.) (paras 26 to 29) whenever there is conflict between a norm in a higher layer in the hierarchy of the laws in the legal system of the country and a norm in a lower layer in the hierarchy, the norm in the higher layer in the hierarchy will prevail. Therefore, if excess payment of tax in a month is not on account of reasons involving interpretation of law, taxability, classification, valuation or applicability of exemption notification and is purely on account of inability of the assessee to exactly determine the total amount collected during the month against the bills raised as a result of which he had determined his tax liability on estimation basis, the excess amount of tax paid during the month can be adjusted against his tax liability during other months and in this regard, there cannot be any monetary limit. 7. Considering above discussion, the appeal is allowed in above terms . 10.2 Tribunal in the case of General Manager (CMTS) versus Commissioner of Central Excise, Chandigarh [ 2014 (36) S.T.R. 1084 (Tri. Del.)] has observed that :- 6. The only point of dispute in this case is as to whether the assessee during the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has paid to the credit of Central Government any amount in excess of the amount liable to be paid towards the service tax liability in the month/quarter, as the case may be, the assessee may adjust such excess amount paid by him against his service tax liability in subsequent month/quarter and sub-rule (4B) lays down the conditions for such adjustment. The main condition is that the excess payment is not on account of any reasons involving interpretation of law, taxability, classification, valuation or applicability of any exemption notification. The other conditions are that an assessee with centralized registration under Rule 4(2) can adjust excess payment in one month against this tax liability in other months without any limit, for other assessee, there is a monetary limit of Rs. one lakh for such adjustment. In our view harmonious construction of Rules 6(4), 6(4A) and 6(4B) would be that Rule 6(4) applies to a case where due to reasons involving interpretation of law, taxability, classification, valuation or applicability of exemption notification, the assessee is unable to correctly determine his service tax liability for a particular month/period and Rule 6(4A) read with Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l tax liability, the Government cannot retain the excess tax paid by the assessee by refusing its adjustment against his tax liability during other months and refusing adjustment of such excess tax payment during a month against tax liability during other months and appropriation and retention of the same would amount to collection of tax without the authority of law which is contrary for the provisions of Art. 265 of the Constitution of India. As held by the Apex Court in case of Ispat Industries Ltd. v. CC, Mumbai reported in 2006 (202) E.L.T. 561 (S.C.) (paras 26 to 29) whenever there is conflict between a norm in a higher layer in the hierarchy of the laws in the legal system of the country and a norm in a lower layer in the hierarchy, the norm in the higher layer in the hierarchy will prevail. Therefore, if excess payment of tax in a month is not on account of reasons involving interpretation of law, taxability, classification, valuation or applicability of exemption notification and is purely on account of inability of the assessee to exactly determine the total amount collected during the month against the bills raised as a result of which he had determined his tax liability ..... X X X X Extracts X X X X X X X X Extracts X X X X
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