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December 2013

2013-TIOL-1550-CESTAT-MUM Varun Shipping Co. Ltd. vs. Commissioner of Service Tax, Mumbai

By Puloma Dalal, Jayesh Gogri, Mandar Telang, Chartered Accountants
Reading Time 2 mins
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Payment of tax before receipt of consideration is an advance and not an excess payment and thus can rightly be adjusted suo motu against the actual liability.

Facts:
The appellant paid service tax in December 2008 and reflected the same as advance payment of tax in the return for the period October 2008 to March 2009 without intimating the range superintendent. On receiving the consideration in April 2009, appellant adjusted the said advance and reflected the same in the return for the period April- September 2009. The department contended that the said payment was not an advance payment but excess payment and thus the appellant could not adjust it suo motu in terms of Rule 6(4B) of Service Tax Rules, 1994 and demanded the tax thereon with interest and penalty.

Held:
Observing that the appellant had reflected the payment of advance payment of tax particulars in both the returns, it was evident that what the appellant made was advance payment of tax and not excess payment of tax. Since the liability to pay tax arose only in April 2009, the Hon. Tribunal held that the payment made prior to such date can be contemplated only as an advance and thus no service tax was liable to be paid.

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