GARIMA ASSOCIATES Vs. COMMISSIONER OF CUS. & C. EX.
LAWS(CE)-2015-7-49
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on July 28,2015

Garima Associates Appellant
VERSUS
COMMISSIONER OF CUS. AND C. EX. Respondents




JUDGEMENT

RAMESH NAIR,MEMBER (J) - (1.)THIS appeal is directed against Order -in -Appeal No. PVR/249/NGP/2012, dated 29 -11 -2010 passed by the Commissioner (Appeals), Central Excise & Customs, Nagpur, wherein ld. Commissioner (Appeals) has upheld the order -in -original No. 03/ST/AC/CND/2011 -12, dated 20 -7 -2011 and rejected appeal filed by the appellant. Short issue involved in this case is that appellant have paid excess amount of service tax of Rs. 2,57,205/ - in the 1st quarter ending December, 2009 and adjusted the same against short payment of Rs. 2,57,205/ - in the 2nd quarter ending March, 2010. The adjudicating authority following the Rule 6(4A) of Service Tax Rules, 1994 allowed adjustment up to Rs. 1,00,000/ - only and confirmed demand of Rs. 1,57,205/ - on the ground that adjustment of more than Rs. 1,00,000/ - is not permissible which resulted in short payment of Rs. 1,57,205/ - in the quarter ending March, 2010. Aggrieved by the said confirmation of demand, the appellant filed appeal before the Commissioner (Appeals), who rejected the appeal and upheld the order -in -original. Being aggrieved by the impugned order appellant is before me.
When the matter was called for hearing neither anybody appeared nor there is any request for adjournment, therefore I proceed to take up the appeal for disposal on merit. On going through the appeal memo filed by the appellant, I find that following case laws have been relied upon by the appellant:

"(a) Commissioner of Central Excise, Salem v. SRC Projects Ltd. [2010 (20) S.T.R. 687 (Tri. -Chennai)].

(b) Nirma Architechs & Valuers v. Commr. of C. Ex. , Ghaziabad [2006 (1) S.T.R. 305 (Tri. -Del)].

(c) Bajaj Travels Ltd. v. Commissioner of Service Tax [ : 2012 (25) S.T.R. 417 (Del).

(d) State of Tamil Nadu v. Sri Swamy and Company [ : 1977 39 STC 85 Mad.]"

(2.)SHRI S.R. Nair, ld. Examiner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further made following submissions:
"(a) Appellants defence that it is a case of advance payment under Rule 6(4A) is not tenable as conditions prescribed under Rule 6(1A) not fulfilled by the appellant. Rule 6(1A) requires the appellant to intimate the details of the amount of service tax paid in advance to the jurisdictional Superintendent of Central Excise within a period of fifteen days from the date of such payment and indicate details of the advance payment made and its adjustment if any in the subsequent return to be filed under Section 70 of the Act. This was not done by the appellant.

(b) The adjustment under Rule 6(4A) was claimed and self -assessed by the appellant in the S.T. 3 return filed by them. No revised returns have been filed by the appellant.

(c) The case laws relied upon by the appellants are inapplicable to the facts and circumstances of the present case.

(d) Reliance is placed on the Apex Court in case of Hari Chand Gopal [ : 2010 (260) E.L.T. 3 (S.C.)] which was followed by the Tribunal in the case of Rishi Shipping v. CCE, Rajkot [ : 2014 (33) S.T.R. 595 (Tri. -Ahd.)].

(e) The case law of Mumbai International Airport [2014 (33) S.T.R. 308 (Tri. -Mumbai)] is not applicable to the facts and circumstances of the present case as in that case the issue was of excess payment under Rule 6(3). In the present case the issue pertains to Rule 6(4A) excess payment which needs to be availed subject to conditions under Rule 6(4B) or in alternative Rule (1A) which pertains to advance payment as claimed by the appellant."

(3.)I have carefully considered the submission made by ld. AR and gone through the grounds of appeal made in the appeal memo. I find that appellant admittedly paid the excess amount of Rs. 2,57,205/ - towards service tax in the quarter ending December, 2009. The adjudicating authority allowed the adjustment of Rs. 1,00,000/ - in the quarter towards service tax liability and in quarter ending March, 2010 adjustment of the remaining amount of Rs. 1,57,205/ - was disallowed. The adjustment of the excess payment is provided under Rule 6(1A) of Service Tax rules which is reproduced below: - -
"Rule 6. Payment of service tax. - (1) - - - -

(1A) Without prejudice to the provisions contained in sub -rule (1), every person liable to pay service tax, may, on his own volition, pay an amount as service tax in advance, to the credit of the Central Government and adjust the amount so paid against the service tax which he is liable to pay for the subsequent period: Provided that the assessee shall, -

(i) intimate the details of the amount of service tax paid in advance, to the jurisdictional Superintendent of Central Excise within a period of fifteen days from the date of such payment; and

(ii) indicate the details of the advance payment made, and its adjustment, if any in the subsequent return to be filed under section 70 of the Act;]"

From the above Rule, it is seen that the assessee is permitted to pay service tax in advance and the same can be adjusted against service tax which he is liable to pay for subsequent period provided assessee intimated amount paid in advance to the jurisdictional Superintendent of the service tax within period of 15 days from date of such payment and intimate the details of advance payment made and its adjustment in the subsequent return to be filed under Section 70 of the Act. In the present case there is no dispute that appellant have deposited advance service tax of Rs. 2,57,205/ -. As regard the condition provided in the proviso to Rule 6(1A), it is observed that regarding the excess payment though the specific intimation was not given to the Superintendent, but from facts, it is clear that excess payment was reflected in ST3 returns for the period Oct. -Dec, 2009 and adjustment thereof was reflected in the ST3 returns for the quarter ending March, 2010. The details of these excess amount as well as adjustment was revealed only on the scrutiny of these returns therefore it cannot be said that appellant have not complied with conditions prescribed in the proviso to Rule 6(1A) of Service Tax Rules, 1994. The Adjudicating Authority as well as the ld. Commissioner (Appeals) have denied the adjustment only on the ground that the case of the appellant is covered under Rule 6(4A) and not under 6(1A) and in terms of Rule 6(4A) the adjustment is allowed only for Rs. 1,00,000/ - whereas I observed that the appellant throughout from the date of show cause notice maintained that claim for adjustment is under Rule 6(4A). From the fact that the appellant have paid service tax in excess to the tune of Rs. 2,57,205/ - in the quarter ending Dec, 2009, therefore the said amount is nothing but advance payment of service tax and as discussed above the condition provided in Rule 6(1A) stand complied with as both the requirements stand fulfilled by way of communication in the form ST3 returns to the department, even if the procedure was not scrupulously followed. Merely for non -observance of the procedure laid down in the rule cannot be made reason for denial of adjustment. I am of the considered view that intention of the rule is very clear that whatsoever excess amount was paid in advance, the same should be adjusted against forth coming tax liability and if it is not allowed it will amount that Government will unjustly enriched with excess amount which cannot be intention of the law. Similar case, this Tribunal is of the view that amount paid in excess because what was required to be paid is nothing but service tax paid in advance. Therefore the same is allowed to be adjusted in subsequent liability of the service tax. Some of the judgments are referred below:

: 2011 (24) S.T.R. 676 (Tri. - Ahmd.)

DAHEJ HARBOUR AND INFRASTRUCTURE LTD.

Versus

C.C.E. & C., VADODARA

4. I have considered the submissions. This is not a case of excess payment of service tax for reasons indicated in sub -rule (4B) of Rule 6 of Service Tax Rules, 1994. None of the reasons for excess payment given in Rule covers this situation. This is a case of advance payment of service tax for the e -service already rendered but payment not received. It is settled law that service tax cannot be recovered in respect of the same service twice. If an advance payment is made, the question of adjustment does not arise. In reality, in the month of April, 2008, when the service tax is to be calculated, the value of service rendered should have been indicated as the value of service which was received on which service tax was payable. In respect of service already rendered in March but payment not received even though the assessee was not required to make the payment they had made the payment. In such a situation all they had to do was in the accounts maintained, show that service tax as paid on March for invoice issued in April. Therefore, the question of paying the service tax for the portion of service rendered in March, 2008 again in April, 2008 does not arise. The impugned order requires the appellant to pay service tax twice on the same service rendered just because they made an advance payment of service tax. In fact, it was a practice in Central Excise department to require the assessee to debit in PLA in the month of March, 2008 even in respect of the goods not cleared. Subsequent clearances against these payments cannot be called as adjustment. If the assessee makes an advance payment towards service rendered, the service tax cannot be demanded once again. In my view, therefore, it will not be correct to say that this is covered by the provisions of Rule 6 of Service Tax Rules, 1994 and therefore the assessee was wrong in adjusting the amount subsequently. In fact it was the assessee's claim that service tax had already been paid in March but their request has not even been considered by the lower authorities since lower authorities have taken a view that assessee did not produce documentary evidence to show that there was excess payment in the month of March, 2008. According to Section 72 of Finance Act, 1994 when a person liable to pay service tax fails to assess the tax in accordance with the provisions, the Central Excise officers can ask the person to produce the accounts, documents or other evidence, as he may deem necessary and after taking into account all the relevant material has to make an assessment order. When the assessee replied to Superintendent of Service tax on 11 -3 -2009 stating that service tax payable in the month of March, 2008 was actually less than what was paid, the assessing officer could have called for the documents and other evidence which he needed to verify to confirm the claim. Instead of doing this, the assessee was straightway issued a show cause notice. In fact, in this case even though assessee claimed that they have made wrong assessment, the assessing officer failed to act according to Section 72 of Finance Act, 1994, which requires him to make an assessment when there is mistake. The same would apply for the month of April also. Nevertheless, this was an omission on the part of Central Excise officers but the fact remains that the assessee has only made statement that there was an excess payment in the month of April, 2008 and no documentary evidence to support this statement was made. Therefore, I cannot find fault with the conclusion reached by the lower authorities that there was no documentary evidence for excess payment in the month of March, 2008.1 feel, the original adjudicating authority should have verified the total value of service rendered, amount received towards service rendered and amount of service tax payable in the month of March, 2008 and April, 2008. If the assessee had made payment of service tax for a service already rendered but amount not received or invoice not raised, that amount is to be treated as an advance paid towards service tax due and does not become excess payment. Under these circumstances, I feel that this is a fit case for waiver of pre -deposit and remand the matter at this stage itself to the lower authorities, so that assessee can produce the details of service rendered, invoices raised and payment received for the month and service tax paid for the month of March and April, 2008 and show to the adjudicating authority that there was an advance payment for service rendered in March, 2008. If it is shown that assessee had paid the tax in advance, in my opinion, no further proceedings would he required against the appellant. However, while remanding the matter, I make it clear that this remand is to be taken as an open remand with all issues open and observations made are only for the purpose of remand. The original adjudicating authority shall be at liberty to consider all the issues and pass a well reasoned order.

, 2010 (20) S.T.R. 815 (Tri. - Chennai)

CHETTINAD CEMENT CORPORATION LTD.

Versus

COMMR. OF C. EX., TRICHY

Heard both sides. Both sides confirm that this is not a case of either delayed payment of service tax or failure to pay service tax. On the other hand, the service tax was paid in excess during the month of March, 2007 which has been adjusted towards the service tax liability for the subsequent months. In a way the appellants have paid tax in advance. As such, they cannot be penalized under Section 76 of the Finance Act, 1994 which applies to cases of failure to pay service tax. Hence the penalty imposed under Section 76 is set aside.

2. As regards the penalty of Rs. 1,000/ - imposed under Section 77, the learned consultant states that the appellants are not pressing their appeal. Hence the same is confirmed. The appeal is partly allowed in the above terms."

The judgments relied upon by the Revenue in the case of Rishi Shipping v. Commissioner of Central Excise, Rajkot [ : 2014 (33) S.T.R. 595 (Tri. -Ahmd.)] which was followed by Hon'ble Apex Court judgment in case of CCE, New Delhi v. Hari Chand Shri. Gopal [ : 2010 (260) E.L.T. 3 (S.C.)]. I am of the view that the case of Rishi Shipping (supra) is related to the adjustment of excess amount in terms of Rule 6(4A) where limit is only Rs. 1 lakh whereas in the present case appellant claimed that adjustment is in terms of Rule 6(1A) therefore the said judgment is not applicable. As per my above discussion, I am of the considered view that as per the facts, appellant's case is covered by Rule 6(1A) of Service Tax Rules, 1994 according to which the adjustment of advance payment is permissible against service tax liability in the subsequent period without any limit of the amount, therefore the impugned order is not sustainable, hence the same is set aside. Appeal is allowed.

(Pronounced in Court on 28 -7 -2015)

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