Postal Department paid service tax by way of Book adjustment

[Kalmesh Siddatagimath]

During the course of audit by the officer of the audit team of Central Taxes Audit Commissionerate, on the records of the Postal Department for the duration of April 2012 to sept 2015 it was observed that the said postal dept had paid service tax by way of book adjustment which was not in accordance with the provision of sec 68 of the Act 1994 read with Rule 6 of service tax Rules, 1994 in view of Board's instructions contained in F.No.137/08/2013-S.T dated 21-04-2014

So, Apex Court, High Court or CESTAT gave judgement or order in favour of Postal Department regarding service Tax paid by way of Book Adjustment by Central Govt or state Govt. As early as possible please send the order of judgement

Thanking you

[KASTURI SETHI]

Dear Querist,

We should take shelter of any case law if law is not clear. Pl. go to Section 67 which is extracted below:

Explanation below clause 4(c) to Section 67 of the Finance Act,1994 “gross amount charged” includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment.”

CCE v. Modern Food Indus. (India) Ltd., 1988 (37) E.L.T. 294 (T)  =  1988 (7) TMI 190 - CEGAT, NEW DELHI Merely because no payment is made in cash or because there is book adjustment, it cannot be said that there is no sale. Book adjustment is also a form of payment.

 

[KASTURI SETHI]

Dear Sir,

Here is the latest and most relevant judgement which will serve your purpose.

2018 (19) G.S.T.L. 62 (Tri. - Del.)  = 2018 (3) TMI 1673 - CESTAT NEW DELHISENIOR POST MASTER Versus COMMISSIONER OF C. EX. & S.T., JAIPUR-I

[DR.MARIAPPAN GOVINDARAJAN]

Since the postal department is the Central Government Department, no cash payment is required to be paid. The same should be paid by inter departmental adjustment.

Before the formation of BSNL, the Department of Telecom also paid service tax by means of book adjustment only.

[KASTURI SETHI]

Case Law in support of Dr.Govindarajan's reply is appended below:- (Appeal of Central Excise Commissioner rejected).

2012 (25) S.T.R. 353 (Tri. - Del.) = 2011 (11) TMI 517 - CESTAT, NEW DELHICOMMISSIONER OF CENTRAL EXCISE, ALLAHABAD Versus BSNL

AI Summary

Book adjustment as payment upheld for discharge of service tax obligations by government departments. Audit challenged Postal Department's use of book adjustment to pay service tax, but statutory explanation treats book adjustment as a form of payment and tribunal authorities have recognised book adjustment and inter departmental adjustments by central departments as valid means to discharge service tax liabilities.