Wrong-bank service tax payment cannot be treated as unpaid, and interest demand on that basis is unsustainable.

Service tax remitted to a bank other than the designated bank was treated as paid where the department acknowledged the amount as service tax and recorded it in its books. An inadvertent deposit in the wrong bank did not change the character of the payment or justify a fresh tax demand. As the notice proposed only interest and not a further tax recovery, the demand of interest on that basis was also unsustainable.

---

---

Issues: Whether service tax paid by the assessee into a bank other than the designated bank could be treated as unpaid so as to justify a fresh demand of tax and interest.

Analysis: The amount remitted by the assessee was acknowledged by the department as service tax and had been accounted for in the books of the concerned office. The mistake related only to the bank through which payment was made. Such inadvertent deposit in a non-designated bank did not alter the character of the payment or justify recovery of the tax again. The notice had in any event proposed only interest, not a fresh tax demand.

Conclusion: The tax could not be demanded again on the ground of deposit in the wrong bank, and the demand of interest on that basis was unsustainable.

---