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Facts:
The appellant is a public sector unit which adjusted the excess payment of service tax against the tax liability of a subsequent period. The appellant held a view that this adjustment was allowable as per the provisions of Rule 6 of the Service Tax Rules, 1994. As per the said Rule 6, excess payment of service tax can be adjusted against future liability on a pro-rata basis, but only under specific conditions mentioned therein.
Held:
Though the appellant’s plea for adjustment was held invalid, it was found that subsequently the Service Tax Rules were amended. As per the amended rules the appellant could adjust his excess payment.
However, the amended rules were not in force during the material time and therefore did not apply to the case at hand. But considering the spirit of the amended rules and the fact that the appellant was a public sector unit, a lenient view was taken and the adjustment was allowed fully.
