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2016 (9) TMI 327 - MADRAS HIGH COURT

2016 (9) TMI 327 - MADRAS HIGH COURT - 2016 (45) S.T.R. 56 (Mad.) - Demand of service tax with interest - Adjustment of excess service tax paid of previous month with the subsequent months Rule 6(3) of the Service Tax Rules, 1994 whether suo moto adjustment of excess paid Service Tax in the subsequent months can be made, when there is a separate procedure to claim refund of the excess paid taxes under Section 11B of the Central Excise Act 1944? Held that: - the respondent-BSNL ought to hav .....

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the Service Tax Rules, to the facts of these cases and record a finding, as to whether, the assessee can suo-motu adjust the tax or entitled to refund of the excess payment of service tax, during the relevant period matter to be decided by original adjudicating authority within a period of eight weeks, from the date of receipt of a copy of this order CMA disposed off. - C.M.A. Nos. 709 and 1108 of 2011 - Dated:- 10-6-2016 - S. Manikumar And D. Krishna Kumar, JJ. For the Appellant : Mr. V .....

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dalore, respondent herein, provides taxable services, under Section 69 of the Finance Act, 1994 and paying service tax regularly. According to the applicant, the respondent has paid service tax, during the period from November 2000 to May 2002, on the value of taxable service, received in one calendar month. They adjusted the Service Tax excess paid, during the previous month with the service tax liability for the subsequent months, contrary to the provisions of the Service Tax Rules 1944. 3. As .....

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just the excess service tax so paid by him against his service tax liability for the subsequent period, if the assessee has refunded the value of taxable service and the Service tax thereon to the person from whom it was received. 4. According to the applicant, the respondent-BSNL was adjusting the service tax payable on monthly basis, without even paying the service tax as well as, without refunding the value of the taxable service and service tax collected from the concerned persons. Thus, the .....

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ed by the same, the respondent-BSNL has filed an appeal before the Commissioner (Appeals), Chennai. The appellate authority has observed that the excess and short payments made by the respondent-BSNL had been adjusted by the Jurisdictional officer and that the respondent has also indicated to the department that they were making payments tentatively, as the exact amount could not be correctly determined and that the excess payment would be adjusted in the subsequent remittance. The respondent-BS .....

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ainst the abovesaid order, the appellant has filed an appeal before the CESTAT, Chennai, which has observed that the appellant during the period November, 2000 to May, 2002 had demanded service tax, taking into account, only the shortage of payment of service tax, whereas, the excess amount paid by the respondent had not been considered. Further, the Tribunal was of the view that the respondent-BSNL was required to file only half yearly returns. Based on above observations, the Tribunal upheld t .....

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, Chennai is correct in holding that suo moto adjustment of excess paid Service Tax in the subsequent months can be made, when there is a separate procedure to claim refund of the excess paid taxes under Section 11B of the Central Excise Act 1944? 7. Mr.V.Sundareswaran, learned Senior Standing Counsel for Customs submitted that the Adjudicating Authority is right in demanding the service tax of ₹ 46.55 Lakhs, for the reason that as per Rule 6, the service tax on the value of the taxable se .....

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, which is not so provided by him either wholly or partially for any reason, provided he has refunded the value of taxable service and the service tax thereon to the person from whom it was received. In the instant case, no value of taxable service and the service tax thereon were refunded to the person from whom it was received by the respondent. In other words, this is a case where the service tax payable in accordance with law is not being properly assessed and paid. 8. Learned Senior Standin .....

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ssment prescribed under Rule 7 of Central Excise Rules, 2002, including the payment of interest would apply. Accordingly, the provisions of Rule 6(3) will not be applicable. 9. It is the further case of the Learned Senior Standing Counsel for the appellant that the respondent neither requested the Deputy Commissioner of Central Excise, Cuddalore nor did the Deputy Commissioner of Central Excise, Cuddalore permit them for payment of Service Tax on provisional basis under the provisions of Rule 6( .....

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F.No.l49/5/95-CX-4, dated 15.10.1996 and F.No.149/01/99-CX-4, dated 29.01.2001, learned Senior Standing Counsel for the appellant contended that the Boards Circular, dated 15.10.1996 was issued prior to the amendment of Rule 6(1), viz., prior to 16.10.1998. Prior to 16.10.1998, service tax was liable to be paid on the billed amount and from 16.10.1998 onwards, the liability to pay is on the amount of value received. According to him, the learned Appellate Authority has failed to see that the Bo .....

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2001, dealt with the method of payment i.e., through TR-6 Challan and it was issued in the context of respondent becoming a corporate entity. He further contended that the appellate authority also failed to take note that the Board, while clarifying certain issues, relating to Cellular Operators, vide F.No.149/01/96-CX-4, dated 13.10.1997 (Query No.III) has stated that excess payment made earlier cannot be adjusted in the subsequent payment of service tax required to be made by them without foll .....

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urrent amount could not be correctly assessed and that the excess payments were adjusted in the next remittance. Interest as calculated and communicated by the Income-Tax Department was also paid by the BSNL. He prayed to sustain the impugned orders. Heard the learned counsel for the parties and perused the materials available on record. 12. What is paid by the BSNL, for the period, November' 2000 to May' 2002, deduced from the material on record, is as follows: Sl.No. Month Service Tax .....

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90,997 33,90,997 14,45,512 19,45,485 13. Material on record further discloses that BSNL has also adjusted the payment of service, in the subsequent months suo-motu. Contention of the Income-Tax Department is that Rule 6(3) of the Service Tax Rules, will not be applicable. Before the Original Authority, they have contented that in terms of Section 83 of the Finance Act, 1994, Section 11B of the Central Excise Act, 1944, have been made applicable to service tax, which deal with refund of excess du .....

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