AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 371
X X X X Extracts X X X X
X X X X Extracts X X X X
....he complete scope of work was finalized to be Rs. 1610.01 Crores, 5% (Rs. 80.50 Crores) of which was agreed to be paid in advance. The contract involved supply of materials as well as erection and installation and civil work. As per the terms of LOA, the Appellants raised the invoice for collection of 1st Installment of advance payment of Rs. 40.25 Crores on 23.09.2010. For the purpose of discharging applicable taxes on the advance received the Appellants self-perceived 60% of amount to be attributable towards the -Supply Portion' and balance 40% of amount be attributable towards 'Service Portion' and thus discharged the Service Tax of Rs. 1.65,83,000/- vide challan dated 04.11.2010. The Appellants raised another invoice for collection of 2nd installment of advance payment of Rs. 40.25 Crores on 21.01.2011. While working out the portion of advance attributable towards 'Service Portion' of the contract, the Appellants re-estimated that service portion constitutes only at 25% of the total contract value of Rs. 1610.01 Crore. The Appellants re-calculated the Service Tax liability considering 25% of the entire advance amount which came to Rs. 20.125 Crores (inclusiv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w cause notice dated 19.02.2013, proposing demand against such irregular adjustment of Rs. 1,87,93,063/- and further considering whole of IInd instalment of Rs. 40.25 crore discussed above towards supply of services and demanding service tax of Rs. 4,14,57,500/- @10.3% on the same instead of Rs. 22,10,065/- paid by the assessee. In adjudication proceedings, the Ld. Commissioner set aside the demand of Rs. 4,14,57,500/- stated above but confirmed the demand of Rs. 1,87,93,063/-, besides imposing penalty and demanding interest thereon, holding that the contention of the assessee that whole of the advance payment of Rs. 80.50 Crores was towards supply of material and goods only could not be accepted which was only an afterthought and they had rightly discharged the service tax of Rs. 1,87,93,063/- and shown in their returns. He further held that the adjustment was even impermissible under Rule 6(4A) of the Service Tax Rules, as in terms of the said Rule, any adjustment if it is made had to be made in the "succeeding month or quarter as the case may be thus such adjustment could be made in the month of Nov. 2010 and April 2011 and the adjustment made in Jan 2012 was out of the purview ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ited was engaged in providing generation and distribution of electricity. (v) that the issue regarding eligibility of the Appellants to adjust the excess paid service tax towards the liability payable in subsequent months in terms of Rule 6 (4A) read with (4B) of Service Tax Rules, 1944 has already been settled by the Hon'ble CESTAT Delhi in the case of General Manager (CMTS) v. CCE, 2014 (8) TMI 589 which was subsequently followed by coordinate benches in many decisions wherein it was held that if excess payment of tax in a month is not on account of reasons involving interpretation of law, taxability, classification, valuation or applicability of exemption notification and is purely on account of inability of the assessee to exactly determine the total amount collected during the month against the bills raised as a result of which he had determined his tax liability on estimation basis, the excess amount of tax paid during the month can be adjusted against his tax liability during other months and in this regard, there cannot be any monetary limit. the Appellants submits that the adjustment of excess tax paid by it towards the tax liability arising in subsequent months in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o tax has been determined. Therefore, the contention of the appellant that the mistakenly appropriated a part of the advance towards service portion can not be faulted as it is not on record that the same was approved by M/s. VISA or they had any information that the appellant had appropriated part of the advance towards service portion. Therefore, if VISA had informed the appellant at a later stage that the whole of the advance was to be appropriated towards cost of material, the same cannot be disputed without any evidence to the contrary. It is a settled law that the terms of the contract between the parties are to be accepted so far as those do not infringe the law. 6. Further, It is not disputed that the for all the time tax amount of Rs. 1,87,93,063/- paid by the appellant on 4.11.2010/31.03.2011 was always remained with the Revenue till its adjustment made in Jan, 2011. It is also not disputed that the advance comprised only 5% of the project value of Rs. 1610.01 crore out of which 445 Crore (130+415) comprised of the service portion as per agreement between the appellant and VISA. This final value of service portion is also not disputed. Final taxable invoices for advance ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r as prescribed by the C.B.E. & C. Sub-rule (3) of Rule 6 covers a situation where an assessee had received payment for certain services to be provided and had paid the service tax on it, but for some reasons, he could not provide the services wholly or partly and according to this rule, the assessee can adjust the excess payment of service tax calculated on pro rata basis against his service tax liability for subsequent period if he has refunded the value of taxable service along with service tax to the person from whom it was received. Thus, the sub-rule (3) provides for limited facility of adjustment in the cases where the amount has already been received by an assessee for the service to be provided and tax leviable thereon had been paid, but subsequently, due to some reasons, the service was not provided either in full or in part. Sub-rule (4) of the Rule 6 provides for provisional assessment, in the case where the assessee for any reason is unable to correctly estimate on the date of deposit, the actual amount payable for a particular month or a quarter, as the case may be, and according to this rule, he may request the jurisdictional Asstt./Dy. Commissioner for payment of se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hs on the basis of his estimated receipt of rupees five crores during the month, the excess tax payment of Rs. 10 lakh paid is like an advance payment of tax whose incidence has not been passed on to his customers. In fact, with effect from 01-03-2008, sub- rule (1A) of Rule 6 has been introduced by Notification No. 4/2008-S.T., dated 01-03-2008 which also provides that without prejudice to the provisions of sub-rule (1) of Rule 6, every person liable to pay service tax may, on his own, pay an amount as service tax in advance to the credit of Central Government and adjust the amount so paid against service tax liability, which he is liable to pay in subsequent period, subject to the condition that he intimates the details of the amount paid in advance to the Jurisdictional Superintendent of Central Excise. The excess payment referred to in sub-rule (4A), read with sub-rule (4B), is like advance payment under sub-rule (1A) of Rule 6. There is no condition in Rule 6(4A) read with Rule 6(4B) providing that for availing of the adjustment facility, the assessee must have opted for centralized registration under Rule 4(2). Moreover, when an assessee during certain months, for reasons oth....