ST - Appellant has sought to adjust excess payment with short payments and this is not permissible - Excess payments have to be claimed by way of refund as principles of unjust enrichment might be involved and short payments have to be made good along with interest - Matter remanded: CESTAT
By TIOL News Service
MUMBAI, FEB 26, 2015: THE CCE, Pune-I confirmed service tax demand of Rs.1,84,53,424/- under 'Business Auxiliary Service'; Rs.32,38,391/- under 'Authorised Service Station' and Rs.11,24,288/- under 'Renting of Immovable Property'. Interest and penal provisions were also added in adequate measure.
The appellant is before the CESTAT with a Stay application.
The following are the submissions -
Renting of Immovable Property - they had paid service tax on the rents received after realising of the rents and challans indicating payment of service tax is available. These were also produced before the Adjudicating Authority. If these are taken into account, the net liability of service tax which remains unpaid would be only Rs.95,896/- as against a demand of Rs.11,24,288/-.
Authorised Service Station - bulk of the demands have been discharged by the appellant at the relevant time either by way of the debit in the CENVAT credit account or by way of cash payment vide TR-6 challans. Even though copies of the extract from the Cenvat Credit register and the challan copies were submitted to the department, no credit has been given in the impugned order. As against the demand of service tax of Rs. 32,38,391/- the amount pending to be paid is only Rs. 1,66,669/-.
Business Auxiliary Service - This demand has arisen in view of the difference between the income shown in the ST-3 returns and income shown in the balance sheet for the respective years, and the income consists of pre-delivery inspection charges, miscellaneous income from sale of scrap etc. and income on account of trade discount received from Maruti Suzuki Ltd. whose car they are selling as dealers. That these discounts have been given to the appellant on account of their achieving certain targets for lifting of cars from Maruti Suzuki Ltd. In other words, these are discounts in the nature of quantity discounts and these payments received have nothing to do with any service rendered and, therefore, these incentives/discounts are not exigible to service tax.
However, it is fairly conceded that they are liable to discharge service tax on the pre-delivery inspection charges which they have undertaken as Authorised Service Station of Maruti Suzuki Ltd. To this extent the matter needs to be remitted.
The AR submitted that the appellant did not produce satisfactory evidence of their having discharged service tax liability under the various heads and, therefore, the finding given by the Adjudicating Authority cannot be faulted.
The Bench observed -
Renting of Immovable property - We find that the appellant had discharged the service tax liability as and when the rental income were received and the details of the challans for the payments made are available. A few of these challans were produced before us. Therefore, the demand of service tax on the entire amount without giving any credit for the payments already made is incorrect in law. It is also seen that the appellants have short paid the service tax on these heads in a few years namely October 2007 to March 2008, 2008-09 and 2010-11, and they have excess paid service tax in 2009-10, 2011-12 and April, 2012 to June 2012. The appellant has sought to adjust excess payment with the short payments. This is not permissible. The excess payments have to be claimed by way of refund and short payments have to be made good by the appellant to the department as principles of unjust enrichment might be involved in any refund claim. Nevertheless, the appellant has to be given due credit for the payments already made. Inasmuch as this has not been done, the mater has to go back to the Adjudicating Authority for recomputation of the correct service tax demand.
Authorised Service Station - The Adjudicating Authority should have verified the claims of the appellant in this regard and should have given them the benefit wherever the tax liability has been discharged. Inasmuch this exercise has not been undertaken by the Adjudicating Authority, the demand in its entirety cannot be sustained. Wherever there are short payments, they have to be made good by the appellant by paying through cash or Cenvat credit along with interest thereon and wherever there is excess payment the appellant has to make a claim for refund of the same in accordance with law.
Business Auxiliary Service - As against the total demand of Rs. 1,84,53,425/- the appellant has conceded their liability on the income received under PDI charges which is Rs. 4,85,94,830/-. It is clearly submitted that the correspondence with Maruti Suzuki Ltd. were not furnished before the Adjudicating Authority at the time of adjudication. Therefore, the appellant should be given a fair opportunity of producing these documents to satisfy the Adjudicating Authority with respect to their contention that these are nothing but trade discounts.
The appeal was allowed by way of remand. The stay application was disposed of.
(See 2015-TIOL-412-CESTAT-MUM)
