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2015 (12) TMI 1555 - CESTAT BANGALORE

2015 (12) TMI 1555 - CESTAT BANGALORE - 2016 (42) S.T.R. 273 (Tri. - Bang.) - Adjustment of excess paid service tax rule 6(3) of STR, 1994 change of rate of tax short-payment of service tax demand of tax, interest and penalty alternative treatment advance payment of service tax - rule 6(1A) of STR, 1994 Rules 4A and 4B of STR, 1994 - Held that: - when the assessee paid excess amount of tax to the exchequer, law of the land is very clear under Article 265 of the Constitution of India, .....

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er the adjustment of the excess service tax paid would be allowed during the later period to the appellant assessee appeal allowed decided in favor of appellant. - ST/1140/2012-SM - Final Order No. 22132/2015 - Dated:- 1-12-2015 - Ashok K. Arya, Member (T) REPRESENTED BY : Shri L.S. Karthikeyan, Advocate, for the Appellant. Shri Ajay Saxena, Commissioner (AR), for the Respondent. [Order]. - Both the parties have been heard in detail. 2. The issue concerns with the adjustment of service t .....

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ts of service tax. However in respect of the above adjustment, Revenue states that the appellant was not entitled to make this adjustment on their own, thus this adjustment which Department quantified as ₹ 6,15,083/- treated it as short payment of service tax and issued the show-cause notice for recovery of the same. 2.1 Revenue through its Order-in-Original dated 25-4-2011 issued by Addl. Commissioner confirmed this demand of service tax along with interest and penalties under Sections 76 .....

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as 12.36% though it was reduced from 24-04-2009 to 10.3%, which they did not apply. Learned advocate points out that some of their customers objected to higher rate of service tax and thereafter the assessee made rectification and adjusted this excess charged from the customers and excess payment made to the exchequer during subsequent periods by issuing credit notes to their customers and by raising fresh invoices by applying correct rate of tax. He also mentions that they revised their ST-3 re .....

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3), then the situation can no doubt be covered by Rule 6(1A) which mentions about payment of service tax in advance to the credit of the Central Government; saying that as they have paid service tax on accrual basis (i.e. in advance) without waiting for the receipt of the service tax from their customers, this situation should be treated as payment of service tax in advance and it could be treated as service tax paid in advance and, therefore, adjustment during the subsequent period is allowed a .....

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n excess over and above the rate of taxation as prevalent during the relevant period. He also cites the decision of Hon ble High Court of Karnataka in the case of CCE, Mangalore-3 v. Solaris Chemtech Ltd. - 2011 (273) E.L.T. 191 (Ker.) saying that adjustment of payment of service tax was applicable and they were entitled to the amount paid in excess to the exchequer. 4. Learned AR, Shri Ajay Saxena appearing for the Revenue argues that the appellant is not at all entitled to the suo motu adjustm .....

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6(3) of S.T.R. cannot be made applicable to present facts. 4.2 The learned AR further points out that this case is also not covered under the provisions of Rule 6(4B) of the Service Tax Rules as whenever there is excess collection of the amount of tax payable, in order to make the adjustment of excess under Rule 6(4B), certain conditions are to be followed and complied with, which the appellant has not done. 4.3 The learned AR argues further that the subject matter concerning the appellant is al .....

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ssessee. 5. After examination of the facts on record and careful consideration of the submissions of both the sides, it is a fact that the appellant paid to the exchequer excess amount of service tax on account of applying higher rate of taxation (i.e. 12.36%) instead of correct rate of tax 10.3% as the rate had been reduced from 12.36% to 10.3% on 24-04-2009. The appellant had continued to raise their invoices to their customers at the old rate of 12.36% during the relevant period and according .....

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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 careful consideration of the facts on record and the circumstances cited by the appellant, when the assessee paid excess amount of tax to the exchequer, law of the land is very clear under A .....

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r the Revenue that the present appellant is not strictly covered under those different Rules of S.T.R., 1994 i.e. Rule 6(3), Rule 6(4A), Rule 6(4B) and Rule 6(1A) of the Service Tax Rules, 1994. But when one sees the combined effect of the provisions of S.T.R., 1994 just quoted above, the implications are that the present appellant has to be given the benefit of adjustment of excess service tax paid by them during the relevant period i.e. April 2009 to September 2009. Revenue is also in agreemen .....

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th the sides, a liberal interpretation and generous view of these Rules quoted above (Service Tax Rules) needs to be taken. I am accordingly taking the combined and liberal view of the Rules quoted above, whereunder the adjustment of the excess service tax paid would be allowed during the later period to the appellant assessee. Here I take the support from the decision of CESTAT, New Delhi in case of General Manager (CMTS) v. CCE, Chandigarh (supra). It is made clear that though this case law of .....

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e 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 ( .....

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d by him is like advance payment of service tax during the month in excess of the actual service tax liability and which can always be adjusted against his service tax liability for other months as there is no unjust enrichment angle involved. For example, if against actual payments of ₹ 4 crore received by an assessee in a particular month against services provided, on which his service liability @ 10% adv. is ₹ 40 lakhs, he has paid tax of ₹ 50 lakhs on the basis of his estim .....

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credit of Central Government and adjust the amount so paid against service tax liability, which he is liable to pay in subsequent period, subject to the condition that he intimates the details of the amount paid in advance to the Jurisdictional Superintendent of Central Excise. The excess payment referred to in sub-rule (4A), read with sub-rule (4B), is like advance payment under sub-rule (IA) of Rule 6. There is no condition in Rule 6(4A) read with Rule 6(4B) providing that for availing of the .....

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