By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Whether adjustment of excess service tax paid can be done in any of the next months/ quarters? Held, No.
Facts:
The appellants paid excess service tax which was adjusted suo motu by them after a long lapse of period. The appellants contested that such service tax adjustment was appropriate vide Rule 6(4A) and 6(4B) of the Service Tax Rules, 1994 since the amount involved was less than Rs. 1 lakh. According to Service Tax Department, such adjustment could be made in the next month or next quarter provided intimation was filed to the department within 15 days of such adjustment. The case of the department was that since the appellant did not follow the procedure prescribed, their adjustment was not acceptable. The first Appellate authority confirmed the demand along with interest and also imposed penalties u/s. 76 and 77 of the Finance Act, 1994. The appellants argued that they have adjusted their own money and hence, penalty was unwarranted in the present case.
Held:
The Tribunal observed that the phrase used under Rule 6(4A) was “subsequent month or quarter” and not “subsequent months and quarters.” Further, the appellants had not fulfilled all conditions as required under the said Rules. Distinguishing the case of Siemens Limited vs. CCE, Pondicherry 2013 (29) STR 168 (Tri.), it was held that since, in the present case, there was no reasonable explanation provided by the appellant, the first Appellate authority was correct in demanding service tax along with interest. However, since the appellants had a bonafide belief with respect to adjustment of excess service tax paid, the penalties were set aside.
