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May 2008

Self-adjustment of excess payment

By Puloma Dalal, Bakul B. Mody, Chartered Accountants
Reading Time 1 mins
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II. Tribunal :


11. Self-adjustment of excess payment :



M/s. Narnolia Securities P. Ltd. v. CST, Ranchi, (2008
TIOL 538 CESTAT-Kol.]

â The appellant had
paid service tax on behalf of four other service providers and later came to
know that service providers had also paid taxes separately, adjusted the same
against subsequent payment.


The Revenue contended that Rule 6(3) did not permit this.


It was held the appellant’s contention that they were under
genuine belief that such adjustment was permissible under Rule 6(3) as ST-3
returns filed disclosed such adjustments which confirmed the bona fides
of the appellant. The Tribunal stated that the Department has at no stage
advised the appellant to claim a refund for excess payment, instead of making
adjustments on their own and that such adjustments are not permitted by Rule
6(3). Based on the facts and circumstances of the case, a lenient view was
taken.

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