Excess Amount Paid In Service Tax Can Be Adjusted Against The Short Payment In Education Cess: CESTAT

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the excess amount paid in service tax can be adjusted against the short payment in education cess.

The bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) has observed that the cenvat credit of basic central excise duty can be utilised for payment of education cess and vice versa. The same analogy is applicable for service tax as well.

The appellant/assessee is in the business of manufacturing cooling towers and parts at their factories located at various locations in India.

The assessee stated that they have paid short service tax, education cess, and a secondary and higher education cess in some months and made excess payments of the same amount in other heads. However, the Department refused to adjust that excess payment on the ground that, in accordance with the provisions of Rule 3(7) of the CCR, 2004, the excess paid service tax cannot be treated as payment towards education cess or SHE and vice versa.

The assessee relied on Circular No. 58/7/2003-S.T., dated May 20, 2003, issued by CBEC, in which the Board clarified that in the event of mentioning the wrong accounting code while paying service tax, the assessees need not be asked to pay the service tax again.

The assessee stated that the short payment has been duly highlighted in the order-in-original, but the excess payment made by them has not been considered at all for adjustment against the short payment. The Commissioner has ignored the fact that, although under the wrong heading, tax has already been paid to the government. Thus, there was no evasion of payment of tax and no revenue loss to the government, making the entire situation revenue-neutral.

The issue raised was whether excess or short-paid amounts under the service tax head can be adjusted for payment of excess or short-paid amounts in education cess or not.

The tribunal held that after adjustment, there was a short payment of Rs. 8.95.160 only in the month of January 2008, which was already paid by the appellant. The demand confirmed in the order on the count was not sustainable.

Case Title: M/s Paharpur Cooling Towers Ltd. Versus Commissioner of Service Tax, Kolkata

Case No.: Service Tax Appeal No. 164 of 2012

Date: 30.08.2023

Counsel For Appellant: Gopal Agarwal

Counsel For Respondent: K. Chowdhury

Click Here To Read The Order