Ahemdabad CESTAT has held in the following case that adjustment of service tax paid under wrong accounting code is to be allowed.
In this case assessee was manufacturing a 'diesel generating set'. Besides that it was also providing maintenance of diesel generating sets to its clients. Before taking service tax registration under 'management, maintenance or repair' service, it paid service tax under wrong service tax code relating to 'erection, commissioning or installation' service.
It was held "plea of the assessee that while making the payment wrong service tax code relating to "erection, installation and commissioning", indicated merits to be considered and having regards to facts of the case and Board's Circular No. 58/7/2003-ST, dated 20.05.03 issued from F.No.l59/2/2003-CX-4 and therefore adjustment of payment in the correct account code are allowed."
Full order of Tribunal is as follows:
CESTAT, AHMEDABAD BENCH
Commissioner of Central Excise & Service Tax, Vapi
v.
Veena Industries Ltd.*
DR. P. BABU, TECHNICAL MEMBER
ORDER NOs. A/2181-2182/WZB/AHD./2011
APPEAL NOs. ST/253/2011 and ST/CO-89/2011
DECEMBER 15, 2011
R. Nagar for the Appellant. S. Suriyanarayanan for the Respondent.
ORDER
1. Commissioner of Central Excise, Vapi has filed this appeal against the Order-in-Original No. 20/DEM/Vapi/2010, dt.31.12.10 in the case of M/s. Veena Industries Ltd., Silvassa. The assessees were engaged in the manufacture of excisable goods namely "diesel generating set" falling under Central Excise Tariff Heading 85. The contention of the Revenue was that the adjudicating authority had failed in appreciating the fact that though the assessee was liable to pay service tax for the services of management, maintenance or repair rendered by them, they had applied for service tax registration only after that they had paid service tax albeit under wrong service tax code and belatedly filed the service tax returns. They have suppressed the fact of providing the said services which came to light later to the department. On adjudication, the original adjudicating authority dropped the proceedings.
2. The basic issue to be decided in this case;
(a) Whether the assessee was liable to pay service tax for the services of management, maintenance or repair rendered by them;
(b) Whether the demand for extended period is sustainable or not;
(c) Whether the penalties imposed under various Sections are sustainable or not.
3. I have gone through the details of the case, various submissions and the related judgments. It is a fact that the assessees were engaged in providing services to its various clients of maintenance of diesel generating set manufactured by the assessee and had not registered for providing the same services and not paid the service tax. It is a fact that the assessees filed the ST-3 returns on 13.02.09 and declared the amount totally to Rs. 4,60,33,540/- for the period April 2007 to November 2008 collected from various clients for providing the maintenance service falling under category "management, maintenance or repair service" chargeable under service tax. It is also a fact that all the activities relating to annual maintenance contract are covered under the category of management, maintenance or repair as defined vide Explanation 2 Section 65 (64) of the Finance Act, 1994. The Board's Circular No. 58/7/2003-ST, dated 20.05.03 the clarification made is also very clear.
4. It is also found that they have applied for registration on 19.05.08 and filed necessary ST-3 returns. A fact which has been acknowledged by the department as is seen by the letter from the superintendent Range-1 Division-II, Silvassa vide No. F. No. SLV-I/AR-Veena/2009-10 dated 01.02.10.
5. Facts being so, I have hesitation to come to the conclusion that the assessee had paid Rs. 51,85,588/- towards the service tax on "installation and commissioning" is in fact the payment of service tax for "annual maintenance and repairs" service category. Hence plea of the assessee that while making the payment wrong service tax code relating to "erection, installation and commissioning", indicated merits to be considered and having regards to facts of the case and Board's Circular No. 58/7/2003-ST, dated 20.05.03 issued from F.No.l59/2/2003-CX-4 and therefore adjustment of payment in the correct account code are allowed. If so, the Board's circular dated 20.05.03 (referred supra) as a payment should be admissible. Therefore the contention made by the assessee is acceptable and it is for the Revenue to take up the matter with the P.A.O.
6. I therefore find that the proceeding initiated against the lessee have no legal basis and to be dropped.
7. Accordingly, the appeal filed by the Revenue is rejected.
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