Intention of Rule 6(1A) of STR is to grant adjustment of excess service tax paid in advance towards forthcoming tax liability. Non furnishing of intimation for advance payment is merely a procedural lapse and denial of adjustment on this ground is not justified.

Rule 6(4A) of Service Tax Rules, 1994 as it stood then allowed adjustment for excess payment of service tax upto Rs.1,00,000/-. The appellant submitted that it was a case of advance payment of service tax covered under Rule 6(1A) of the said Rules wherein no such limit was prescribed. However, the department argued that it is covered under Rule 6(4A) of the said Rules as it was reflected so in the ST-3 return and therefore, due to procedural lapse of not furnishing requisite intimation within 15 days to jurisdictional Superintendent of Central Excise, the adjustment is denied.

Held

Excess payment is nothing but advance payment. Such excess payment and adjustment thereof is reflected in service tax returns. On scrutiny of the returns, these facts were evident. Therefore, it can be said that the appellant complied with the conditions prescribed under Rule 6(1A) of the Service Tax Rules though not scrupulously. Mere non-observance of procedure cannot be the sole reason for denial of adjustment. Intention of Rule 6(1A) is to grant adjustment of excess service tax paid in advance towards forthcoming tax liability. Denial of such adjustment would unjustly enrich Government with excess amount which cannot be the intention of law. It is no longer res integra that service tax cannot be recovered twice in respect of the same service and therefore the adjustment is allowed. [Note: It is to be noted that Rule 6(4A) of the Service Tax Rules has been amended and with effect from 1st April, 2012, there is no limit for the amount of adjustment of excess service tax paid].