Whether assessee is liable for interest and penalty when assessee has deposit services tax in erroneous account?

PJ/CASE LAW/2016-17/3090

Case:EFFLUENT & WATER TREATMENT ENGINEERS (P) LTD. Vs UNION OF INDIA

Citation:2016 (41) S.T.R. 790 (Cal.)

Brief Facts:The grievance of the petitioner is that though the petitioner had made a self-assessment of service tax for the financial year ended March 31, 2011, the deposit was made into an erroneous account and, as a consequence whereof, a possible demand of interest and penalty may be faced by the petitioner.
On the petition being moved, an impression was given that the mistake was in the last two digits of a fifteen-digit unique identification number allotted to every assessee. In such circumstances, an initial order was made out for the department to report whether the system was so harsh that it would not leave any room for human error in a key or two being erroneously punched.
It now transpires that the petitioner had not availed of the e-filing facility but had deposited hard copy documents along with the self-assessed quantum of service tax for the relevant financial year. The department has pointed out that the system is so designed that if an erroneous code is punched in, the relevant page would not open for the e-filing to progress any further.
Appellant’s Contention:The petitioner says that since the tax has been deposited in due time and the money remained in the suspense account without being credited to the appropriate account by reason of the mistaken code indicated in the documents, no prejudice has been suffered by the department or the revenue and the petitioner should not be visited with any penalty or claim on account of interest.
Reasoning of Judgment: Since it is open to the petitioner to make a representation to the appropriate Commissioner and it is evident that the perceived non-payment of the service tax for the relevant year will result in the matter travelling to the Commissioner, W.P. 25980 (W) of 2014 is disposed of by leaving the Commissioner free to take an appropriate decision upon the matter, whether on the petitioner’s representation or otherwise, by having due regard to the nature of the error, the fact that the money remained in the suspense account and earned interest to the Revenue and that there may not have been any mala fides on the part of the petitioner.
Decision: Appeal disposed of
Comment: The gist of the case is that assessee has made payments under wrong code by hard copy instead of paying by e-system which reportedly designed not to accept payments on punching of wrong code. Hence Petitioner is directed to make a representation to jurisdictional Commissioner for him to take appropriate decision - Nature of error and fact that money having been remained in suspense account, earned interest for Revenue, be considered in disposing of application.

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PJ/CASE LAW/2016-17/3090

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