CESTAT allows adjustment of excess paid Service Tax against subsequent liabilities

Gulmohar Park Mall Pvt Ltd Vs Commissioner of Central Excise And Service Tax (CESTAT Ahmedabad)

 In a significant ruling, the CESTAT Ahmedabad upheld the adjustment of excess paid Service Tax by Gulmohar Park Mall Pvt Ltd against subsequent liabilities.

The case involved Gulmohar Park Mall Pvt Ltd, engaged in renting immovable property services, which had initially paid 100% of the Service Tax on rent. However, following a Supreme Court interim order, the service recipient also paid 50% of the Service Tax. This resulted in an excess payment by Gulmohar Park Mall Pvt Ltd, prompting them to seek either a refund or adjustment against future tax liabilities.

Despite the department’s initial refusal to allow this adjustment, citing the Supreme Court order, Gulmohar Park Mall Pvt Ltd proceeded to adjust Rs. 32,67,727 against subsequent Service Tax liabilities. A subsequent show cause notice challenged this adjustment, leading to an appeal before the Commissioner (Appeals).

During the appeal, arguments centered on whether the adjustment was permissible under Rule 6(4)(A) of the Service Tax Rules, 1994, and whether the revenue’s claim of wrong availment of CENVAT credit was valid. The appellant contended that since there was no issue of CENVAT credit, and the adjustment was in accordance with legal provisions and court precedents, the demand by the revenue was unfounded.

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