The Chennai bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) granted relief to Tata Steel Downstream by permitting the adjustment of their Service Tax liability from credit, in accordance with Rule 6(3) of the Service Tax Rules, 1994
The facts in this appeal indicate that the appellant M/s. Tata Steel Downstream Products Ltd has raised 3 supplementary invoices due to increased packing cost on their customer Viz., M/s. Tata Steel Ltd., for whom they are working as a job worker and have paid the service tax including cesses of Rs.59,05,952/-. As M/s. Tata Steel Ltd. has rejected these 3 supplementary invoices and having not paid, the appellant has taken the credit of excess service tax paid.
The appellant has filed a refund claim as a matter of abundant precaution. After negotiations, on revising their claim, the appellant has again raised a revised supplementary invoice involving service tax amount of Rs.12,83,399/- + cesses which was paid adjusting the service tax amount already paid in respect of 3 supplementary invoices earlier raised. Thus, it is to be noted that the appellant has availed credit of the service tax paid on the supplementary invoices and used a part of the amount for paying the service tax in the subsequent period on revised subsequent supplementary invoice raised.
The lower appellate authority after analysing the provisions of Rule 6 of the Service Tax Rules, 1994, has come to the conclusion that the appellant is eligible for adjustment of the service tax excess paid. However, he rejected the appeal as the appellant has filed a refund claim for the entire service tax of Rs.59,05,952/- paid which is under denovo adjudication as directed by the Tribunal vide Final Order No. 41276/2019 dated 13.11.2019. However, the sanction of refund or otherwise is not the issue in this appeal.
In this appeal, only the issue of legality of adjustment of service tax liability from the credit availed in terms of Rule 6(3) of Service Tax Rules, 1994, is being examined. The Original Adjudicating Authority has demanded service tax amount of ₹11,35,700/- under Section 73 of the Finance Act, 1994 along with interest and also imposed penalty under section 76 of the Act ibid after arriving at a decision that excess payment of service tax paid by the appellant originally on the 3 supplementary invoices raised, would not come under the category of excess payment and as the appellant have adjusted future service tax liability in the subsequent invoice, the demand raised was confirmed.
Ms. P. Jayalakshmi representing the appellant submitted that the rejection of supplementary invoices by the customer was deemed insufficient grounds for an excess Service Tax payment. However, a Chartered Accountant Certificate was produced to show reversal of the three supplementary invoices and the fact that no consideration was received on the same, but unfortunately the same was not considered by the authority.
Further the adjudicating authority had held that the refund claim for the first invoice was time barred and for the second and third invoices, the appellant provided no evidence of customer rejection and the adjustment of payments for subsequent periods. However, despite the Appellant providing the Chartered Accountant Certificate to prove rejection, the same was not considered.
The bench found that the appellant was not contesting the service tax excess paid in respect of 2nd and 3rd supplementary invoices. Further the single member bench of the tribunal comprising Vasa Sesha Giri Rao (Technical member) affirmed the decision of the lower appellate authority holding that the appellant is eligible for adjustment of the service tax liability on the subsequent supplementary invoice raised against the excess service tax paid on the original supplementary invoices which were not paid by their customer Viz., M/s. Tata Steel Limited. Further found that the appellant has submitted Chartered Accountant’s Certificate to the effect that they have canceled 3 supplementary invoices raised originally and that they have not received any consideration in respect of these invoices.
Accordingly, the impugned Order-in-Appeal dated 28.10.2022 was not sustainable and ordered to be set aside. The appeal was allowed with consequential relief.
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