CA Ashish Chaudhary
Every assessee liable to pay service tax is to take registration with service tax department. Where assessee has been providing services from multiple premises, it may obtain separate registration for each of the premises or may obtain centralized registration for all the premises take together. Tax needs to be paid under the code for which registration has been obtained.
Sometime, it could be possible that multiple registrations are obtained at the same premise by multiple entities working within a group or otherwise.
In both the scenarios, due to inadvertence or clerical error, tax could be paid under wrong code. The error could be of the following natures:
What could be remedies in above scenarios where tax due to government has been paid albeit under wrong code?
Under the Constitution no tax can be collected other than under authority of law. There is nothing specific in the ST law which covers this type of error. . However there are two trade notices issued by different Commissionerate which have different point of views in above situations( ST law is central):
As it happens, there is conflicting views on the same matter by different Commissionerate. What should assessee do?
Recently in case of Sahara India TV Network V/s. CCE Noida 2016(41) S.T.R. 145(Tri.-Delhi), It has been held that when tax has been paid under wrong code of same legal entity, procedure as prescribed by Kochhi Commissionerate could be followed to adjust the amount among unit inter se as there is no revenue loss to government.
In another recent case under Central Excise in case of Devang Paper Mills Pvt Ltd & 1 vs UOI & 3 2016-TIOL-37-HC-AHM-CX, it has been held by Gujarat High Court that tax paid under wrong code of one unit could be adjusted against correct code. HC made following remarks:
Whatever be the accounting difficulty, when undisputed fact is that the petitioner did pay a certain excise duty, merely mentioning wrong code in the process, cannot result into such harsh consequence of the entire payment not being recognized as valid, incurring further liability of repayment of the basic duty with interest and penalties
Above judgments are certainly in favour of assessee and could be cited when the initial objection is made by the revenue or audit party.
Though there is no provision under the law for adjustment of tax paid under incorrect code, but trade notice of Kochhi Commissionerate and above recent decisions could be helpful for assessee for seeking inter unit adjustment of tax paid.
If the amount is significant then choice to dispute taking strength from the Trade Notice + cases. The explanation may be ensured to be in writing (speed post acknowledgement due) and also marked to the jurisdictional Asst. Dy Commissioner. However, if amount is small it is advisable to pay tax under correct code and write off in the books. If it is within the group then payment option is preferable as a dispute appears sure.
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