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2015 (3) TMI 1124 - AT - Service TaxAdjustment of Refund of service tax with interest liability - Interest was arisen as per EA-2000 Audit Objection - Refund was allowed under Notification No. 41/2007-S.T - Held that:- when the audit pointed out that they were not eligible for the credit, the appellant had simply reversed the credit. Once such a reversal was made, and when the audit pointed out that interest was liable to be paid on 29-9-2008, the appropriate procedure to follow was to issue a show cause notice as per sub-section (2B) of Section 11A of Central Excise Act, 1944 which can be applied to service tax also. As a result of audit objection arrears cannot arise even if it is accepted and paid. If the full amount is not paid by an assessee, recovery proceedings have to be started in accordance with law. Adjustment from the amount available with the department is not one of the recognized mode of recovery of arrears which is not confirmed and no demand has been issued. - Refund allowed - Decided in favor of assessee.
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