Excess Service tax paid can be adjusted with future Service Tax liability and cannot be denied on the ground of not having centralised registration or can be subjected to monetary limit.

General Manager (CMTS) Vs. Commissioner of Central Excise [2014 (8) TMI 589 – CESTAT NEW DELHI]

General Manager (CMTS) (“the Appellant”) are engaged in providing taxable services in the category of telephone services. During scrutiny of their ST-3 Returns for the period October, 2006 to March, 2007, it was found that while paying Service tax for the month of November, 2006 they had adjusted an amount of Rs. 9,13,200/- which was paid in excess earlier and further, in the month of January, 2007, they adjusted an amount of Rs. 4,72,907/- against Education Cess.

The Adjudicating Authority vide its order dated March 20, 2008 confirmed demand of Service tax and Education Cess amounting to Rs. 3,86,107/- along with interest and penalty and held that only the assessee who provides taxable service from more than one premises or offices and having centralized registration,, can adjust the excess Service tax paid against their future Service tax liability for subsequent period under Rule 6(4A) read with Rule 6(4B) of the Service Tax Rules, 1994 (“the Service Tax Rules”). It was further contended that an assessee with centralized registration under Rule 4(2) of the Service Tax Rules can adjust excess payment in one month against the tax liability in other months without any limit and for other assessee, there is a monetary limit of Rs. 1 lakh for such adjustment.

On appeal being filed, the Commissioner (Appeals) upheld the contentions of the Adjudicating Authority and confirmed the demand on the Appellant. Being aggrieved, the Appellant preferred an appeal before the Hon’ble CESTAT, Delhi͘

It was held by the Hon’ble CESTAT, Delhi that the excess payment referred to in Rule 6(4A) read with Rule 6(4B) of the Service Tax Rules is like advance payment under Rule 6(1A) thereof for which there cannot be any monetary limit and there is no condition in Rule 6(4A) read with Rule 6(4B) of the Service Tax Rules for availing the adjustment facility, the assessee must have opted for centralized registration.

It was further held by the Hon’ble Tribunal that when an assessee during certain months,  for reasons other than interpretation of law, taxability and classification, valuation or applicability of exemption, has paid Service tax in excess of his actual tax liability, the Government cannot retain the excess tax paid by the assessee by refusing its adjustment against his tax liability for future months and such refusal of adjustment would amount to collection of tax without the authority of law which is contrary for the provisions of Article 265 of the Constitution of India.

(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: bimaljain@hotmail.com)

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