Miscredited service tax payment can be adjusted to the correct registration where the error is bona fide and revenue loss is absent.

Service tax remitted by one registered unit of the same assessee under the wrong registration number was treated as a rectifiable accounting error, not as short payment or deliberate default. Because the amount was not used by another unit, the registrations belonged to the same legal person, and departmental circulars and trade notices provided a correction procedure for miscredited remittances, adjustment to the correct account was permissible. In the absence of mala fide or revenue loss, interest and penalty were not sustainable, and the tax payment was directed to be corrected under the prescribed administrative procedure.

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Issues: Whether service tax paid by one registered unit of the same assessee but mentioned under the wrong registration number of another unit could be adjusted to the correct account, and whether interest and penalty were sustainable in such circumstances.

Analysis: The wrong entry in the challan was treated as a rectifiable mistake, not a case of short payment or deliberate default. The registrations belonged to the same legal person, the amount had not been utilised by the other unit, and the available departmental circular and trade notice recognised a procedure for correction of remittances made under wrong accounting codes or registration numbers. In the absence of mala fide and where the Revenue suffered no loss, the demand for interest and penalty could not be sustained.

Conclusion: Adjustment of the amount was permissible, and the levy of interest and penalty was not warranted. The appeal was allowed and the matter was remanded for correction of the payment in accordance with the prescribed procedure.

Final Conclusion: The impugned demand was set aside, and the dispute was sent back for administrative adjustment of the tax payment under the correct registration.

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