2023 (9) TMI 571 - AT - Service Tax

Utilization of excess paid service tax for adjustment during the succeeding month - Rule 6(4A) of Service Tax Rules 1994 - HELD THAT - The said sub-rule (4A) provides for adjustment of excess paid service tax during the succeeding month or quarter - the said subrule does not require the said adjustment to be made during the immediately succeeding month and therefore there are no violation of the said sub-rule by the appellant in adjusting the amount excess paid for the month of September 2012 during the month of December 2012 - it is also noted that the conditions stipulated in sub-rule (4B) of Rule 6 of Service Tax Rules 1994 though invoked by Revenue the same are unsubstantiated in the said show cause notice. Therefore Revenue has failed to establish that the appellant has violated any conditions specified in the said sub-rule (4B) of Rule 6 of Service Tax Rules 1994 - the appellant was eligible for utilization of excess paid service tax of Rs.60, 17, 195/- during the month of December 2012 the impugned order is liable to be set aside. Appeal allowed.

Summary

Issues involved:
The issue involved in this case is the adjustment of excess paid service tax by the appellant, the interpretation of Rule 6(4A) and Rule 6(4B) of Service Tax Rules, 1994, and the imposition of penalty and interest by the Revenue.

Interpretation of Rule 6(4A) and Rule 6(4B) of Service Tax Rules, 1994:
The appellant had paid excess service tax of Rs.60,17,195/- for the month of September 2012, which was adjusted in December 2012. The Revenue contended that the excess paid service tax should have been utilized during the immediate next succeeding month as per Rule 6(4A). However, the appellant argued that Rule 6(4A) does not specify immediate adjustment and allows adjustment in the succeeding month. The Tribunal agreed with the appellant, stating that Rule 6(4A) does not mandate immediate adjustment, and therefore, the appellant did not violate the rule by adjusting the excess amount in December 2012.

Allegations under Rule 6(4B) of Service Tax Rules, 1994:
The Revenue invoked Rule 6(4B) which states that the excess amount paid should not be on account of interpretation of law, taxability, valuation, or exemption notification. The appellant argued that the show cause notice did not allege that the excess payment was due to any of these reasons. The Tribunal found that the conditions specified in Rule 6(4B) were unsubstantiated in the show cause notice, leading to the conclusion that the Revenue failed to establish any violation by the appellant. Consequently, the Tribunal held that the appellant was eligible to utilize the excess paid service tax in December 2012.

Penalty and Interest Imposition:
The original authority had confirmed the demand for service tax, imposed a penalty, and ordered payment of interest under Section 75 of the Finance Act, 1994. However, the Tribunal set aside the impugned order, ruling in favor of the appellant. The Tribunal found that the appellant had correctly adjusted the excess paid service tax in accordance with Rule 6(4A) and that the Revenue had not proven any violation of Rule 6(4B). Therefore, the imposition of penalty and interest was deemed unwarranted, and the appeal was allowed.