Service Tax | Tax Paid Under Wrong Service Category Cannot Be Demanded Again: CESTAT Mumbai
The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has set aside a service tax demand raised against the assesse, holding that once service tax has already been paid under the Reverse Charge Mechanism, merely under a wrong service category, the department cannot demand the same tax again.A Bench comprising Dr. Suvendu Kumar Pati (Judicial Member)...
The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has set aside a service tax demand raised against the assesse, holding that once service tax has already been paid under the Reverse Charge Mechanism, merely under a wrong service category, the department cannot demand the same tax again.
A Bench comprising Dr. Suvendu Kumar Pati (Judicial Member) allowed the assessee's appeal and quashed the order passed by the Commissioner (Appeals), granting consequential relief to the assessee .
The assessee, Sodexo India Services Ltd. was subjected to audit for the period 2013–2016. During the audit, the Revenue noticed that the assessee had paid service tax on certain foreign currency expenses (such as bank guarantee commission, technical assistance, legal and professional fees) under the category of Business Auxiliary Service (BAS) instead of Management and Business Consultancy (MBC) and IPR Services
The assessee argued that it had already paid the entire tax amount under reverse charge, the revenue issued a show cause notice in 2019 and confirmed a demand of ₹11.75 lakh with interest and penalty by invoking the extended period of limitation.
The assessee also argued that the entire service tax liability had already been discharged before issuance of the show cause notice and the payment of tax under a wrong service heading does not mean non-payment of tax.
Allowing the appeal, the ITAT held that the entire tax amount was admittedly paid before issuance of the show cause notice, which attracted Section 73(3) of the Finance Act, 1994, barring issuance of notice.
The Bench observed that merely mentioning a wrong service description in the ST-3 return does not mean the tax was not paid or did not reach the government.
The Bench held that the tax already paid under wrong category can always be considered towards discharge of liability under another category/new category.
The Bench had relied on its earlier decisions, including State Bank of India v. CGST [2020(42). G.S.T.L. 219(Tri-Chan.)]and Air Charter Services Pvt. Ltd [2017(5) G.S.T.L. 107(Tri-Del.)., to reiterate that tax paid under a wrong head is still valid discharge of liability.
In view of the above, the CESTAT allowed the assessee's appeal and set aside the service tax demand, interest and penalty.
Case Title: Sodexo India Services Pvt. Ltd. Vs. Commissioner of Central Excise and Service Tax
Case No.: Service Tax Appeal No. 85614 of 2025
Appearance for Appellant/Assessee: Shri Arun Jain
Appaerance for Respondent: Shri Dhananjay Dahiwale, Dy. Commissioner