Adjustment of excess service tax against later liability upheld under a liberal reading of Rule 6(3).

Excess service tax paid was adjusted against subsequent service tax liability for services rendered to a Special Economic Zone, and Rule 6(3) of the Service Tax Rules was interpreted liberally to permit such adjustment. Earlier decisions had accepted similar offsets, and the Tribunal held that the adjustment could not be denied even on a stricter reading. The Revenue's objection was rejected and the adjustment was upheld.

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Issues: Whether the assessee could adjust excess service tax paid towards subsequent service tax liability in respect of services rendered to a Special Economic Zone, and whether Rule 6(3) of the Service Tax Rules permitted such adjustment.

Analysis: The Tribunal noted that earlier decisions had accepted similar adjustments and that a liberal interpretation of the rule had consistently been preferred. Even assuming a strict construction might limit adjustment, the prevailing judicial view was that the assessee's adjustment could not be denied on that basis.

Conclusion: The adjustment was upheld and the Revenue's objection was rejected.

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