Service Tax excess Paid can be adjusted against Succeeding month or Quarter: CESTAT sets aside Penalty Order [Read Order]

The Delhi Bench of Customs Excise and Services Tax Appellate Tribunal (CESTAT) has set aside the both service demand and penalty order imposed against the appellant by the department and observed that the service tax excess paid can be adjusted against the succeeding month or quarter.

The succinct fact is that the appellant has adjusted the excess services tax paid in the month of June and July was adjusted in the returns for the months of August and September. The same information was provided to the department by giving month wise details of adjustments on account of short payment/excess payment in April to September 2007.

Despite the appellant's information, the department sent the appellant a Show Cause Notice in an effort to recover the service tax of Rs. 1,58,52,669 that was allegedly improperly adjusted by the appellant, together with interest and penalty. Additionally, the adjudicating body confirmed the demand in the contested decision and assessed the appellant a fine of Rs. 1,60,000,000.

R.P. Jindal, the counsel of the appellant submitted that the present case is a result of incorrect filing of the entries in the ST-3 returns by the appellant and instead of adjusting the service tax paid in terms of Rule 6 (4A) of Service Tax Rules, they have wrongly mentioned the details under Rule 6 (3) of Service Tax Rules in the ST-3 returns filed by them.

Further asserted that mere mentioning the fact under a wrong column and merely quoting a wrong rule should not render them liable to pay service tax again. The impugned order is cryptic and was passed mechanically without even considering the submissions made in the reply to the Show Cause Notice.

The authorised representative for the Department, Rajeev Kapoor, reaffirmed that Rule 6(3) of the Service Tax Rule's requirements are quite clear and that the appellant has failed to prove convincingly that they have returned the service tax for which no service has been rendered by them.

The appellant is qualified to take advantage of the provisions of Rule 6 (4A) of the STR, 1994, according to the two-bench of Justice Dilip Gupta (President) and P. Anjali Kumar (Technical Member).

Furthermore stated that neither the SCN nor the contested order contests the fact that the appellant has made good on the service tax shortfall they paid, along with interest.

To Read the full text of the Order CLICK HERE

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