Mistake in filing ST 3

[Harshit Sanghvi]

Client is providing construction of residential complex service where liability is ₹ 5 lacs but by mistake Client also shown the same value and tax liability in two other services also.. These are all same figures shown thrice instead of once. This resulted into liability of Rs, 15 lacs and paid is only ₹ 5 lacs. Now we are under ST audit. Please guide us how we can cliam relief for this mistake. Reference of any case law will be appreciated. Thanks in advance.

[KASTURI SETHI]

Sh.Dilip Sanghvi Ji,

Service Tax (or any tax) paid in excess by mistake is just a deposit with Govt. No time limit is applicable for claiming refund from the department. There is a judgement of Karnataka High Court judgment on this issue in your favour. Easily available on google or Indian Kanoon site.

[YAGAY and SUN]

In addition to above reply, you would have to prove with documentary evidences that it was a mistake, then only you can seek specific relief from the Service Tax Department. Further, if due to such mistake the wrongly deposited service tax is treated as pre-deposit, then only you will get refund or demand waiver etc, as seeking refund of pre-deposit does not bar by limitation of time.

[KASTURI SETHI]

Yes. Burden of proof is cast upon the assessee/Service Provider.

[KASTURI SETHI]

(1) Refund not hit by bar of limitation if Service Tax paid on exempted services by mistake (2) Writ Petition against Commissioner (Appeals) order rejecting refund of Service Tax on exempted services as time-barred - Such Writ Petition not to be dismissed on the ground of availability of alternate Appellate remedy

The Supreme Court Bench comprising Hon’ble Mr. Justice D.K. Jain and Hon’ble Mr. Justice Asok Kumar Ganguly on 11-7-2011 after condoning the delay dismissed the Petition for Special Leave to Appeal (Civil) Nos. CC 10732-10733 of 2011 with I.A. Nos. 1-2 of 2011 = 2011 (7) TMI 1334 - SC ORDER filed by Commissioner of Service Tax against the Judgment and Order dated 18-11-2010 of Karnataka High Court in Writ Appeal Nos. 2992-2993 of 2009 as reported in 2012 (7) TMI 22 - KARNATAKA HIGH COURT (Commissioner v. KVR Construction). While dismissing the petitions, the Supreme Court passed the following order :

“Delay condoned.

The Special Leave Petitions are dismissed.”

The Karnataka High Court in its impugned order had held that the provisions of limitation under Section 11B of Central Excise Act, 1944, would not apply for refund of Service Tax paid by mistake on exempted services even though the assessee had filed claim under Form-R which shows that they had treated such payment as duty but later on claimed it as not a duty. Mere payment of an amount by the assessee and acceptance by Department would not regularize such amount as duty if it was not actually payable and paid by mistake.

It was further held that Writ Petition against Commissioner (Appeals) order rejecting refund of Service Tax paid on exempted services as time-barred, is maintainable and cannot be rejected on the ground of availability of alternate appellate remedy particularly when payment of Service Tax on exempted services held not to be Tax/duty so as to attract the provisions of Section 11B of Central Excise Act, 1944 and also the provision of Section 35B of the said Act relating to appeal to Appellate Tribunal is not applicable.

[Ganeshan Kalyani]

Sir, you have mentioned that in ST-3 return 15 lacs liability was shown mistakenly but 5 lacs was correctly paid. The department is correct in asking you to pay balance 10 lacs. Now, it becomes your duty to prove that it was unintentional mistake of disclosing incorrect figures at ST-03. The can be proved by producing your books of account which would reflect the fact. Books of accounts is a valid evidence.

[Ganeshan Kalyani]

As regard the eligibility of refund of the excess paid service tax, the views of experts are correct. I agree with their views.

[Harshit Sanghvi]

Thank you experts.

we have produced documents and spot memo issued today.we will draft a detailed reply and submit to department.

i was looking for a case law that when mistake apparent then no action is to be taken.

[KASTURI SETHI]

The judgement of Karnataka High Court upheld by the Supreme Court will definitely help you.

[ANUP BUGADE]

Hello Sir,

If an assessee has filed service tax returns as nil but has provided taxable services and has paid all the service tax dues upon it through the challans in the same year itself then how to prove that the challans belong to the same particular year

AI Summary

Mistaken payment relief: excess service tax paid by mistake can be refunded if supported by documentary proof and refund rules.
A duplicated declaration in ST 3 produced excess declared liability; relief for tax paid by mistake is available because mistaken payments are treated as deposits and may be refunded, and refunds of Service Tax paid on exempt services are not necessarily barred by limitation. The assessee bears the burden of proof and must produce documentary evidence, such as books of account and spot memos, to substantiate that the excess declaration/payment was unintentional; if departmental action treats the amount as pre deposit or time barred, a writ against an appellate rejection may be maintainable.