Book adjustment payment of service tax accepted where reconciliation records satisfied Board instructions and defeated the demand.

Service tax liability could be discharged by book adjustment where Board instructions recognised that mode for pending adjudication matters involving Department of Posts and the Ministry of Railways. The adjudicating authority was required to verify reconciliation of tax paid through book adjustment against the Controller General of Accounts records, and the available remittance details and Railway Board communication supported that reconciliation. On those facts, the conditions in the instructions were satisfied, so the demand confirmed solely for non-payment through the prescribed mode could not be sustained.

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Issues: Whether service tax liability could be validly discharged by book adjustment and whether the demand confirmed only for want of payment through the prescribed mode could be sustained.

Analysis: The Board's instructions recognized payment of service tax by book adjustment for cases pending adjudication involving Department of Posts and the Ministry of Railways, and directed adjudicating authorities to focus on reconciliation of duty or tax paid by that mode. The record also showed remittance details and a communication from the Railway Board evidencing transfer of the service tax through book adjustment and reference to the relevant government account. Since the reconciliation materials were drawn from the Controller General of Accounts' records, the conditions indicated in the instructions stood satisfied.

Conclusion: Service tax payment by book adjustment was accepted on the facts of the case, and the impugned order confirming the demand could not be sustained.

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