Double recovery barred for service tax collected from customers when liability was already discharged through Cenvat credit.

Service tax collected from customers was not required to be deposited again under section 73A of the Finance Act, 1994 where the same tax liability had already been discharged through Cenvat credit. The Tribunal applied the principle that an amount already paid to the Revenue cannot be recovered a second time merely because it was collected from buyers, since that would create double payment. Relying on the analogous Larger Bench principle under Central Excise law, it concluded that the retained amount was not again payable and the consequential demand, interest and penalties were unsustainable.

---

---

Issues: Whether service tax collected from customers was required to be deposited again under section 73A of the Finance Act, 1994 when the tax had already been paid through Cenvat credit.

Analysis: The amount collected from the buyers represented service tax on the activity undertaken by the assessee, but the record showed that the tax liability had already been discharged through utilisation of Cenvat credit. The central question was whether, in such circumstances, the same amount could still be treated as retained tax requiring deposit under section 73A. By applying the principle that a sum already paid to the Revenue cannot be recovered again merely because it was collected from customers, the Tribunal held that the present case would result in double payment if a second deposit were directed. The analogy drawn from the Larger Bench ruling on recovery of amounts under the Central Excise law supported this conclusion.

Conclusion: The amount collected was not again payable under section 73A, and the demand, interest and penalties were unsustainable.

---