Payment of service in wrong category

[sunil mehta]

A co-op bank gets commission from Local Electricity company for collection of light bills from consumers of that electricity company.That co-op bank failed to obtain registration under 'BAS ' category and continued to pay stax due on commission income under 'Banking & Finance services' till sept'08.Thereafter asseessee got BAS services added to Form  ST-2 in oct'08.All dues under BAS have been paid regularly from oct'08 till date. This happened because asseessee was genuinely under impression that s.tax was to be paid under Banking services Query:-1)What are the consequences of not paying the s.tax collected in correct category (BAS) but in other category.(Banking services) 2)Whether suptd. can ask the service provider to pay full s.tax from beginning under BAS services with interest and penalty eventhough s.tax was paid in 'Banking services till sept.'08? 3)Similarly whether suptd. can levy penalty for non filing of ST-3 return under BAS till sept.'08? 4)Any case law in respect of matter similar to above case?

AI Summary

Bank's Mistaken Service Tax Payment Under Wrong Category Corrected; No Double Tax Demand or Major Penalties Expected. A cooperative bank collected commissions for processing electricity bill payments but mistakenly paid service tax under the 'Banking & Finance services' category instead of the correct 'Business Auxiliary Services' (BAS) category until September 2008. After correcting the registration in October 2008, the bank continued paying under BAS. The query seeks to understand the consequences of this error, including potential demands for back taxes, interest, and penalties. The response clarifies that since there was no tax evasion, the tax cannot be demanded twice, and penalties for non-filing under BAS are unlikely, though minor penalties for procedural errors may apply.