Whether Service Tax paid in excess can be adjusted against future Service Tax liabilities?

PJ/Case Law /2016-17/3320

Case:-PUNJAB NATIONAL BANK VERSUS COMMISSIONER OF C. EX. & S.T., CHANDIGARH-II

Citation:- 2016 (43) S.T.R. 471 (Tri. - Del.)

Brief Facts:- Brief facts of the case are that the appellant is registered with the Service Tax department for providing the taxable service namely, “Banking and Financial Services” falling under Clause 105(zm) of the Finance Act, 1994. Apart from paying Service Tax on banking and financial services, the appellant also pays Service Tax on the services namely ‘service charges/processing fee/Documentation charges and commission on Inland letter of guarantee. It pays Service Tax on gross amount realized towards the services rendered. Subsequently, on case to case basis, the head office of the appellant refunds certain amounts to the recipient of the service based on their credibility. During a particular month, if the value of the service provided was reduced by the amount so refunded, then on the net balance amount, the Service Tax liability was discharged by the appellant. The modus operandi of adjustment of the tax amount for the disputed period was objected to by the Service Tax department, which resulted in confirmation of the Service Tax demand along with interest and imposition of equal amount of penalty. Appeal filed by the appellant against the adjudication order was dismissed by the ld. Commr. (Appeals) vide the impugned order. Hence, the present appeal before this Tribunal.

Appellants Contention:- The ld. Advocate, Sh. Bipin Garg appearing for the appellant relies on sub-rule (3) of Rule 6 of the Service Tax Rules, 1994, wherein specific provisions exist for adjustment of the outstanding amount towards subsequent liabilities.
The ld. Advocate, Sh. Bipin Garg appearing for the appellant relies on sub-rule (3) of Rule 6 of the Service Tax Rules, 1994, wherein specific provisions exist for adjustment of the outstanding amount towards subsequent liabilities.

Respondents Contention:- Mrs. Kanu Verma Kumar, the ld. DR appearing for the Revenue reiterates the findings recorded in the impugned order.

Reasoning Of Judgement:- The Tribunal heard the ld. Counsel for both the sides and perused the records.
The short question involved in this appeal for consideration by this Tribunal is as to whether amount of Service Tax paid at a higher rate can be adjusted for the Service Tax liabilities for subsequent period. In this context, the Tribunal found that Rule 6(3) of the Service Tax Rules clearly provides for such adjustment. The said rule is extracted herein below.
Where an assessee has paid to the credit of Central Government service tax in respect of a taxable service, which is not so provided by him either wholly or partially for any reason, the assessee may adjust the excess service tax so paid by him (calculated on a pro rata basis) 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.
In view of the above statutory provisions, the Tribunal did not find any merits in the impugned order, and thus, same is set aside and the appeal is allowed in favour of the appellant with consequential relief, if any, as per law.

Decision:- Appeal allowed.

Comment:- The gist of the case is that assessee can adjust the service tax paid in excess with its liability for the subsequent period in view of the specific provision in Rule 6(3) of the Service Tax Rules, 1994.

Prepared By:-Praniti Lalwani

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PJ/Case Law /2016-17/3320

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