Excess Service Tax Paid can be Adjusted Beyond Immediate Succeeding Month or Quarter u/r 6(4A): CESTAT in BSNL Case [Read Order]

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that excess service tax paid can be adjusted beyond the immediate succeeding month or quarter under Rule 6(4A) of the Service Tax Rules, 1994.

Bharat Sanchar Nigam Ltd. (BSNL), the appellant, was engaged in providing telecommunication services. A previous order of the tribunal had remanded the matter for reconciliation of service tax payments, Cenvat credit, and liabilities.

The Commissioner of CGST and Central Excise submitted a reconciliation report confirming that BSNL had made excess payments of service tax amounting to Rs. 17,40,891.42. After adjusting excess Cenvatcredit taken and interest payable, the net excess payment came to Rs. 11,29,452.

The appellant’s counsel argued that Rule 6(4A) did not restrict adjustment of excess tax paid only to the immediate succeeding month or quarter and that such adjustments could be made in later periods as well. They further argued that BSNL was entitled to a refund of the net excess payment, subject to the test of unjust enrichment, since the reconciliation was accepted by both sides.

The revenue counsel countered that Rule 6(4A) permitted only adjustments against the succeeding month or quarter and that refund claims for excess payments outside this scope were not maintainable. The department also argued that the earlier adjudicating authority had rightly denied the refund.

The bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) observed that Rule 6(4A) states excess payment can be adjusted against the succeeding month or quarter but does not say it must be the immediate succeeding period.

The tribunal pointed out that there was no dispute on the reconciled figures between the parties and that the refund claim could be allowed if BSNL satisfied the unjust enrichment requirement.

The tribunal explained that since the matter had been pending for several years, the issue of time bar should not be raised. It directed the adjudicating authority to verify compliance with the unjust enrichment test and to grant the refund of Rs. 11,29,452 with applicable interest if the condition was satisfied. The appeal was disposed of with these directions.

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