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of <h1>Service tax paid on cancelled supplementary invoices can be adjusted against future liability when customer rejects increased costs</h1> <h3>M/s. Tata Steel Downstream Products Ltd. Versus Commissioner of GST and Central Excise, Chennai</h3> M/s. Tata Steel Downstream Products Ltd. Versus Commissioner of GST and Central Excise, Chennai - TMI Issues Involved:1. Adjustment of excess Service Tax paid against future Service Tax liability.2. Time-barred nature of the Show Cause Notice (SCN).3. Legality of the refund claim and its adjudication.Summary:Adjustment of Excess Service Tax Paid Against Future Service Tax Liability:The appellant, M/s. Tata Steel Processing and Distribution Limited (TSPDL), raised supplementary invoices due to increased packing costs and paid Service Tax and Cess. These invoices were later rejected by their customer, M/s. Tata Steel Ltd. The appellant revised the invoices and adjusted the excess Service Tax paid against future Service Tax liabilities. However, the Department contended that this adjustment was incorrect u/s 6(3) of the Service Tax Rules, 1994, leading to a demand of Rs.11,35,700/- u/s 73 of the Finance Act, 1994, along with interest u/s 75 and a penalty of Rs.1,13,570/- u/s 76. The adjudicating authority confirmed this demand, which was upheld by the Commissioner (Appeals).Time-Barred Nature of the Show Cause Notice (SCN):The appellant argued that the SCN No. 08/2019 dated 10.10.2019 was time-barred and issued as an afterthought following the rejection of their refund claim. The SCN was issued after the Order-in-Original and Order-in-Appeal had already rejected the refund claim on the grounds that the amount claimed was already adjusted by the appellant.Legality of the Refund Claim and Its Adjudication:The appellant had filed a refund claim u/s 11B of the Central Excise Act, 1944, as applicable to the Finance Act, 1994, for the excess Service Tax paid. This refund claim was initially rejected on the grounds that the amount was already adjusted by the appellant. The Commissioner (Appeals) upheld this rejection, but the Hon'ble CESTAT remanded the matter for fresh consideration. The appellant contended that the adjudicating authority ignored the CESTAT's Final Order No. 41276/2019, which recorded that the appellant was not contesting the refund for the adjusted portion of the Service Tax paid.Judgment:The Tribunal found that the appellant was eligible for the adjustment of the excess Service Tax paid against future Service Tax liabilities. The Tribunal noted that the appellant had submitted a Chartered Accountant's Certificate confirming the cancellation of the original supplementary invoices and that no consideration was received for these invoices. Consequently, the Tribunal set aside the impugned Order-in-Appeal No. 55/2022 dated 28.10.2022 and allowed the appeal with consequential relief as per the law.(Order pronounced in open court on 29.04.2024)
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