Wrong registration payment of service tax treated as discharge of liability, defeating fresh demand and penalties for GTA services.

Tax remitted under reverse charge for GTA services was treated as duly discharged even though it was paid under the wrong commissionerate registration code, because the amount had reached the Government account and the error was only one of accounting and registration. On that basis, a fresh demand of service tax, education cess and interest was held unsustainable, and the proper course was departmental adjustment rather than re-demand. Penalty under Section 76 was also found inapplicable because there was no failure to pay tax, only mistaken remittance. Penalty under Section 77 was likewise not leviable, as non-mention of GTA services in the registration was treated as a procedural lapse without tax loss.

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Issues: (i) Whether service tax, education cess and interest could be demanded again when tax had already been deposited under a wrong commissionerate registration code; (ii) Whether penalty under Section 76 of the Finance Act, 1994 was leviable; (iii) Whether penalty under Section 77 of the Finance Act, 1994 was leviable for non-mention of GTA services in the service tax registration.

Issue (i): Whether service tax, education cess and interest could be demanded again when tax had already been deposited under a wrong commissionerate registration code.

Analysis: The tax liability under reverse charge for GTA services had already been discharged, but the remittance was made under the Kolkata Commissionerate registration instead of the Haldia Commissionerate registration. The Board's circular and the trade notice contemplated correction of remittances made under a wrong accounting code or registration number through departmental adjustment, and the cited case law treated such mistaken payment as not amounting to non-payment of tax. Since the amount had reached the Government account, the discrepancy was only one of accounting and registration.

Conclusion: The demand of service tax, education cess and interest was unsustainable and was set aside.

Issue (ii): Whether penalty under Section 76 of the Finance Act, 1994 was leviable.

Analysis: Section 76 applies where a person fails to pay service tax. On the facts, the tax had already been paid to the Government account, though under the wrong registration. The case therefore did not involve failure to pay tax, but only a mistaken remittance under an incorrect code.

Conclusion: Penalty under Section 76 was not leviable and was set aside.

Issue (iii): Whether penalty under Section 77 of the Finance Act, 1994 was leviable for non-mention of GTA services in the service tax registration.

Analysis: The omission to reflect GTA services in the registration was treated as a procedural lapse, not as a substantive default causing tax loss, because the service tax itself had already been deposited with the Government.

Conclusion: Penalty under Section 77 was not leviable and was set aside.

Final Conclusion: The appeal by the assessee was allowed and the departmental appeal was dismissed, with the impugned demand and penalties annulled.

Ratio Decidendi: Tax paid to the Government under a wrong registration or accounting code cannot be treated as non-payment where the liability has in substance been discharged, and departmental adjustment is the proper course rather than a fresh demand or penalty.

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