When excess payment of Service tax is established, its adjustment cannot be denied merely on non-compliance of procedural aspect

In the instant case, BSNL (Appellant) were undertaking operations in the remote areas and therefore they were not able to precisely assess their Service tax liability by 5^thof the month following the month for which the Service tax is required be paid. Accordingly, to be on a safer side, they estimated and paid Service tax in a manner that it does not turn out to be less than actually payable. Thereafter when the Service tax actually paid was found to be more than that actually payable, the excess amount paid was adjusted in the subsequent month. The Commissioner in his order did not dispute the fact of excess payment and its subsequent adjustment but disallowed such adjustment on ground that proper procedure has not been followed in this regard.

Being aggrieved, the Appellant preferred an appeal before the Hon’ble CESTAT, Delhi contending that a mere procedural infringement should not result in denial of a substantive benefit and relied upon following judgments:

• BSNL Vs. CCE Chandigarh [2010 (17) STR 209 (Tri.-Del.)];
• Nirma Architects &Valuers Vs. CCE Ghaziabad [2006 (1) STR 305 (Tri.-Del.)];
• CCE, New Delhi Vs. Sentinel Security (P) Ltd.;
• Bharti Cellular Ltd. Vs. Commissioner [2006 (1) STR 39 (Tri.-Del.)].

The Hon’ble CESTAT, Delhi held that the matter is no longer res integra as it has been consistently held that substantial benefit cannot be denied merely because some aspects of the procedure had not been followed. The Hon’ble Tribunal further observed that there has been no malafide on the part of the Appellant as is evident from the fact that the Adjudicating Authority refrained from imposing any penalty observing that the Appellant acted in a bonafide manner and malafide cannot be attributed to them. Hence, the Hon’ble Tribunal allowed the adjustment of excess Service tax to the Appellant.