2010 (8) TMI 530 - AT - Service Tax

Court affirms Commissioner's decision in favor of respondent on service tax issue.

The court upheld the Commissioner (Appeals) decision in favor of the respondent in an appeal filed by the Revenue regarding alleged non-payment of service ... Penalty - Under section 76 read with Rule 6 - Adjustment of excess service tax paid - It is also submitted by the Respondent that they have intimated to Range Superintendent of such an adjustment but after 15 days and it was only a technical default of the respondent and there is not short payment of service tax - Find that while issuing show cause notice, the department failed to consider the intimation given by the respondent with regard to such an adjustment of excess payment of service tax by them. The Commissioner (Appeals) has rightly held that the respondent have discharged their service tax liability properly by adjusting the excess service tax paid by them and thus there is no question of short payment - The impugned order is upheld and the appeal filed by the revenue is rejected. Issues:1. Appeal against order of the Commissioner (Appeals) regarding service tax payment.2. Interpretation of Rule 6(4A&B) of the Service Tax Rules, 1994.3. Validity of adjustment of excess service tax paid by the respondent.4. Compliance with notification requirements under Rule 6(4B).5. Consideration of intimation given by the respondent regarding the adjustment.Analysis:1. The appeal was filed by the Revenue against the order of the Commissioner (Appeals) regarding a show cause notice issued to the respondent for alleged non-payment of service tax amounting to Rs. 1,00,924 for the period January 2008 to February 2008 in relation to Commercial Construction Service. The respondent claimed to have inadvertently deposited an excess service tax amount in October 2007, which was adjusted against the service tax payable for the subsequent months. The lower adjudicating authority confirmed the demand, but the Commissioner (Appeals) dropped the demand, leading to the Revenue's appeal.2. The learned DR argued that Rule 6(4A&B) of the Service Tax Rules, 1994 governs the adjustment of excess service tax paid. It was contended that the respondent violated the conditions of Rule 6(4B) by not intimating the Jurisdictional Superintendent of Central Excise about the adjustment within 15 days, making them liable to pay the service tax.3. Upon examination, the judge noted that the department did not dispute that the excess amount was paid by the respondent in October 2007 and that the respondent was not entitled to a refund for this excess payment. The respondent claimed to have intimated the Range Superintendent about the adjustment, albeit after 15 days, attributing it to a technical default. It was established that there was no short payment of service tax as the respondent properly discharged their service tax liability by adjusting the excess amount paid. The judge concurred with the Commissioner (Appeals) that there was no question of short payment, thereby upholding the impugned order and rejecting the Revenue's appeal.4. The judgment emphasized the importance of considering the respondent's intimation regarding the adjustment of excess service tax payment, highlighting that the department failed to acknowledge this crucial information when issuing the show cause notice. This failure to take into account the adjustment made by the respondent led to the erroneous demand, which was correctly rectified by the Commissioner (Appeals) in favor of the respondent.5. In conclusion, the judgment reaffirmed the legality of the respondent's adjustment of excess service tax paid and underscored the significance of compliance with notification requirements under Rule 6(4B) while recognizing technical defaults without penalizing them when there is no actual short payment of service tax.