RELEVANT PARAGRAPH
6. On plain reading of Sub-rule (1) of Rule 6 of the Rules, it is clear that service tax shall be paid to the credit of the Central Government by the 5th of the month immediately following the calendar month in which the payments are received, towards the value of taxable service. Sub-rule (3) of Rule 6 provides, that where an assessee paid excess service tax he may adjust the excess service tax so paid by him against his service tax liability for the subsequent period, if the assessee has refunded the value of taxable service and the service tax thereon to the person from whom it was received. It is clear that the adjustment of the excess service tax is permissible against the subsequent period and subject to fulfilment of the condition that if the assessee has refunded the value of taxable service and the service tax thereon to the person from whom it was received. There is no provision for adjustment for short payment of tax earlier period against excess payment of tax in the subsequent period. Learned Chartered Accountant submits that the excess amount paid in the subsequent period may be treated as mere deposit which can be adjusted against the earlier short payment and it may be paid along with interest. I am unable to accept the contention of the learned Chartered Accountant. The assessee paid the service tax of excess amount against the taxable service which cannot be treated as mere deposit. Therefore, such adjustment is contrary to the provisions of Rule 6(3) of the Rules. Hence, demand of tax on this issue is justified.
