Strict conditions for service tax adjustment under Rule 6(3) require payment to government credit and refund to the recipient.

Suo motu adjustment of service tax under Rule 6(3) is available only when the rule's conditions are strictly met, including payment of tax to the credit of the Central Government for taxable services not provided and refund of that amount to the recipient. On the facts described, the amount was paid to the Department of Telecommunications and was not shown to have been paid in the manner required by the rule, so the factual predicates for adjustment were absent. The adjustment therefore was not permissible, and the order allowing it was set aside.

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Issues: Whether the assessee was entitled to suo motu adjustment of service tax under Rule 6(3) of the Service Tax Rules, 1994.

Analysis: Rule 6(3) permits adjustment only where service tax has been paid to the credit of the Central Government in respect of taxable services not provided and the amount has been refunded to the recipients. On the facts, the amount was paid to the Department of Telecommunications and was not shown to have been paid to the credit of the Central Government in the manner contemplated by the rule. The factual predicates for invoking the adjustment provision were therefore absent.

Conclusion: The assessee was not entitled to adjustment under Rule 6(3); the Commissioner (Appeals) was incorrect in allowing the adjustment.

Final Conclusion: The order permitting adjustment was set aside and the revenue's appeal succeeded.

Ratio Decidendi: Adjustment of service tax under Rule 6(3) is available only when the conditions stated in the rule are strictly satisfied, including payment to the credit of the Central Government and refund to the recipient.

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