Welspun Corp Ltd VERSUS C.C.E. & S.T.-Rajkot

Service Tax Appeal No. 304 of 2012

(Arising out of OIO-16/COMMR/2012 dated 15/03/2012 passed by Commissioner of Central

Excise, CUSTOMS (Adjudication)-RAJKOT)

 

Welspun Corp Ltd

VERSUS

C.C.E. & S.T.-Rajkot

 

APPEARANCE:

Shri Hardik Modh, Advocate appeared for the Applicant

Shri Dinesh Prithiani, Assistant Commissioner (AR) for the Respondent

CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR

HON’BLE MEMBER (TECHNICAL), MR. RAJU

Final Order No. A/ 10208 /2023

DATE OF HEARING: 04.10.2022

DATE OF DECISION: 03.02.2023

RAMESH NAIR

The brief facts of the case are that the appellant for setting up their

Steel Rolling Mill at Anjar entered into contract no. VAI-W005 dated

12.07.2005 with their foreign supplier for supply of technical documentation

and engineering services for Plate Stakle Mill at Anjar. The services received

in 2005 from M/S VAI Industries (UK ) Ltd were falling under the category

of consulting engineer service for their Anjar unit and have been acquired

for 1278465 GBP equivalent to Indian Rs 10,31,85,960/- under six invoices.

On receipt of the aforesaid service against the total service tax liability of

RS 1,11,82,120/-. The appellant deposited the said service tax vide 2

challans bearing no. 1/2005-06 and 2/2005- 2006 amounting to Rs.

38,09,645/- and 41,66,210/- respectively at Mumbai and 1 challan bearing

  1. 6/2006 – 07 dated 04.08.2006 for Rs. 33,64,895/- at Gandhidham. The

appellant have not declared the consulting engineering service in their ST-3

returns for the period October 2005 to March 2066. Accordingly, Show

cause notice was issued proposing confirmation of demand of service tax

amounting to Rs. 1,11,82,120/- and for appropriation of Rs. 33,64,895/-

paid at Gandhidham penalties under section 76,77 & 78 were also proposed.

The adjudicating authority confirmed the demand of Rs 78,17,225/- and

corresponding penalties. Being aggrieved by Order-in-Original the appeal is

filed by the appellant.

Shri Hardik Modh, Learned Counsel appearing on behalf of the

appellant submits that the amount for demand, confirmed by the

adjudicating authority, was already paid by the appellant’s head office at

Mumbai. Merely, because instead of Anjar unit the service tax paid by their

head office at Mumbai, it cannot be said that there is non-payment of

service tax. The service tax paid by the head office can be adjusted

against the service tax dues against the Anjar Unit. Therefore, no demand

exists. He placed reliance on the following judgments:

 Devang Paper Mills Pvt Ltd vs. UOI – SCA no. 12264 of 2015

 Commissioner of C. Ex & ST, Bhopal Vs. KK. Kedia – 2014 (35) STR

383 (Tri. Del.)

 M/s. Neyveli Lignite Corporation Ltd vs. Commissioner of GST &

central Excise , Trichy [ MANU/CC?0022/2018]

 M/s. Sahara India TV Network vs. CCE & ST, Noida – 2016 (41) STR

145 (Tri. Del).

 M/s. Western Coalfields Ltd vs. Commissioner of Excise & Service Tax

– 2019 (4) TMI 1075 – CESTAT Mumbai.

 Auro pumps Pvt Ltd vs. UOI- 2017 (7) TMI 24 (Guj. HC)

 M/s Falah Steel vs. UOI – 2016 (6) TMI 924 (Guj. HC)

Shri Dinesh Prithiani, Learned Assistant Commissioner (AR) appearing

on behalf of the Revenue reiterates the finding of the impugned order.

We have carefully considered the submission made by both sides and

perused the record. We find that in the present case the demand was

confirmed only for the reason that the appellant at their Anjar unit had not 

paid the service tax on services received from abroad on reverse charge

basis. However, there is no dispute as the same was admitted in the show

cause notice as well as in the impugned order that the service tax of Rs.

78,17,225/- was deposited by the appellant’s head office at Mumbai under

different registration number of input service distributor. The appellant’s

Anjar unit is not a separate entity as the same is part of a single entity i.e.

Welspun Gujarat Stahi Rohren Ltd which is now known as Welspun Corp Ltd.

Therefore, the payment made by head office under different registration

number cannot be demanded from the Appellant’s Anjar Unit and if at all

there is discrepancy of different registration of head office the

department could have adjusted service tax paid by the head office against

the service tax due of appellant’s Anjar unit. On this issue the board has

also issued a Circular No 58/7/2003 dated 20.05.2003. The relevant portion

of circular is reproduced below:

“Subject : Ratification of remittances made against wrong accounting

code and or wrong STC Code/C. Ex. Registration Number – Procedure –

Regarding.

There has been number of representations from registered service

providers/receivers and Central excise assessees for rectification of

mistakes occurred during remittances of service tax or Central excise

duty against wrong accounting head and/or incorrect registration

numbers.

The Central Board of Excise & Customs vide S.T. Circular No.

58/7/2003 (F.No. 157/2/2003 Cx. A), dated 20-5-2003 has clarified

that in such instances the matter should be sorted out with the P.A.O.

and the assessee need not be asked to pay Service Tax again. The

transfer entries has to be effected by the PAO, as per Pr. Chief

Controller of Accounts, New Delhi‟s letter No. Coord/2(1)/76/e-PAO

(Chennai)/13-14/159, dated 4-9-2013 and the Civil Accounts Manual

of the PAO, read with letter Chord/2(8)/Cex/13-14/224, dated 1-5-

2014, even for previous years.

The instances, resulting in remittances against wrong Head of

accounts/STC numbers/C. Ex. Registration number, are cited below : –

Service Tax has been paid in the wrong accounting code of a

difference service than which is rendered, where the mistake has

occurred under same registration number.

Service Tax has been paid against incorrect Accounting Minor

Heads of Education Cess, interest, penalty Secondary Higher

Education Cess and or vice versa. For eg : interest paid under

Secondary Higher Education Cess, etc.

Service Tax has been paid against the STC number of another

assessee/same assessee‟s (having multiple registrations) different

registration number.

Service Tax has been paid against Central Excise Registration

number of the assessee instead of Service Tax Code Number or vice

versa (major heads-Customs-037, Central Excise-038 and Service

Tax-044).

Service Tax has been paid against cancelled/surrendered

registrations on obtaining centralized registration.

In such instances, in order to ensure uniformity and to avoid

hardships to the assessees, the following procedure is prescribed to be

followed by the assessee and the field formations.

Case 1. The assessee should represent (Through Range and Division)

to the Commissioner of Central Excise and Service Tax, describing the

mistake occurred/reasons for such errors along with certified copies of

the remittance challans, ST-3 Returns for the relevant period and any

other document pertains to the issue to establish the genuine mistake

and to ratify the error.

Case 2. Same as above.

Case 3. The assessee should obtain a no objection Certificate from

the assessee or any other person against whose registration number

to which the wrong remittances have been made by e-payment to

transfer the amount from their registration number, certified by the

concerned Range Officer of Central Excise/Service Tax that the said

amount has not been utilized or paid by him and does not surface in

his ledger (Books of accounts) and attach with the representation

besides the documents enumerated against Case I above.”

From the above circular it is clear that the discrepancy such as payment of

service tax under wrong registration can be adjusted against the correct

registration for which the service tax is actually due. In the present case

even though the service tax was paid under the registration of head office

Mumbai but the appellants Anjar unit as well as their Mumbai head office

is one single entity. Accordingly, in the light of the abovecircular the

department could have made the necessary adjustment instead of raising

the demand twice on the appellant. This issue has been considered various

judgment cited by the appellant. Some of the judgment are reproduced

below:-

  1. Devang Paper Mills Pvt Ltd vs. UOI – SCA no. 12264 of 2015.

“5.

Whatever be the accounting difficulty, when undisputed fact

is that the petitioner did pay a certain excise duty, merely mentioning

wrong code in the process, cannot result into such harsh consequence 5 | P a g e S T / 3 0 4 / 2 0 1 2 – D B

of the entire payment not being recognized as valid, incurring further

liability of repayment of the basic duty with interest and penalties. Such

amount was deposited by the petitioner with the Government of India

and it was duly credited in the Government account. It is not even the

case of the respondents that the petitioner had any other code by the

number AADCD7232REM001 and for which there was separate

manufacturing activity inviting separate duty liability. Indisputably,

thus, the petitioner had singular duty liability for which the actual

payment was also made. Under the circumstances, the impugned

communication dated 05.05.2015 and notice dated 21.07.2015 are

quashed. The respondents are directed to give credit of the duty paid

by the petitioner for a sum of Rs. 22.15 Lacs by making necessary

accounting entries on the basis that the same was paid at the relevant

time. If thereafter any sum remains unpaid, it would be open for the

Department to take further action in accordance with law.

The petition is disposed of in the above terms.”

  1. Commissioner of C. Ex & ST, Bhopal Vs. KK. Kedia – 2014 (35) STR 383

(Tri. Del.)

“Being aggrieved with the order passed by Commissioner (Appeals), Revenue

has filed the present appeal.

  1. After hearing both the sides, I find that the respondent was a partner in

a partnership firm engaged in providing management and repair services.

With effect from 1-4-2011, the said partnership firm was dissolved and fresh

registration was granted to the appellant as a person. The said respondent

filed a refund claim of Rs. 9,39,564/- in respect of Service Tax paid by him,

by way of adjustment of the said amount which was deposited by him in a

wrong code belonging to partnership firm. The said adjustment was not

allowed by the Deputy Commissioner of Central Excise. On appeal,

Commissioner (Appeals) observed that the respondent was one of the

partner of the erstwhile partnership was eligible to claim refund, if otherwise

admissible. He observed that when the amount in question does not pertain

to any outstanding liability of the partnership firm, the money deposited by

the respondent in the old Service Tax registration code belonging to the

partnership firm is a sheer mistake and has to be considered as a money

deposited by Shri K.K. Kedia in his own Service Tax code. He accordingly

allowed such adjustment.

  1. I do not find any infirmity in the finding of the appellate authority.

Admittedly, the Service Tax was wrongly deposited in a wrong code

belonging to partnership firm which was dissolved at the relevant time. As

such, it is a mistake on the part of the respondents which is required to be

rectified and the amount deposited in the partnership firm is required to be

adjusted in the assessee‟s registered code.

  1. In view of the above, appeal is rejected.”
  2. M/s. Sahara India TV Network vs. CCE & ST, Noida – 2016 (41) STR 145

(Tri. Del).

“6. We have considered the contentions of both sides. We find that in

the case of K.K. Kedia (supra) CESTAT, in effect, has held that such

adjustment can be permitted while in the case of Plastichemix Industries

(supra) such adjustment is held to be not permissible on the ground that

there is no provision for that in the Service Tax law. It is evident from the

facts of the case narrated that the legal person for both the registrations

(one for NOIDA unit and other for Mumbai unit) is the same. Further, it is

evident that it is simply a case of wrong Service Tax registration number

having been mentioned in the Service Tax deposit challan. In this case

the wrong registration number happens to be of the appellant itself

though belonging to its different unit. It could as well have been that by

mistake the registration number of a different assessee was mentioned in

which case it could not have been asserted that Service Tax was

deposited in the account of that assessee whose registration number was

wrongly mentioned in the challan (though its name did not appear

therein) and not in the account of the person whose name was mentioned

in the challan. Such mistakes can happen and it can scarcely be

anybody‟s case that such mistakes are beyond rectification. In this case,

the Assistant Commissioner, Service Tax in-charge of the appellant‟s

Mumbai unit has categorically mentioned that the impugned amount of

service tax (Rs. 25 lakhs) deposited has not been utilised towards paying

service tax by the Bombay unit. The CESTAT judgment in the case of

Plastichemix Industries (supra) makes a summary observation that there

is no provision under the present service tax law for adjustment of

service tax payments from the account of one registered unit to the

account of another registered unit. It however does not say that there is

any provision in the service tax law which prohibits such adjustment.

Further, as stated earlier, the issue is not so much of law but of a mistake

of incorrectly mentioning the registration number in the service tax

deposit challan. That such mistakes do happen is also evident from the

fact that Commissionerate of Cochin issued a Trade Notice No. 3/2014-

S.T., dated 10-7-2014, the relevant part of which reads as under : –

“Subject : Ratification of remittances made against wrong

accounting code and or wrong STC Code/C. Ex. Registration

Number – Procedure – Regarding.

There has been number of representations from registered

service providers/receivers and Central excise assessees for

rectification of mistakes occurred during remittances of service

tax or Central excise duty against wrong accounting head

and/or incorrect registration numbers.

The Central Board of Excise & Customs vide S.T. Circular No.

58/7/2003 (F.No. 157/2/2003 Cx. A), dated 20-5-2003 has

clarified that in such instances the matter should be sorted out

with the P.A.O. and the assessee need not be asked to pay

Service Tax again. The transfer entries has to be effected by the

PAO, as per Pr. Chief Controller of Accounts, New Delhi‟s letter

No. Coord/2(1)/76/e-PAO (Chennai)/13-14/159, dated 4-9-

2013 and the Civil Accounts Manual of the PAO, read with letter

Chord/2(8)/Cex/13-14/224, dated 1-5-2014, even for previous

years.

The instances, resulting in remittances against wrong Head of

accounts/STC numbers/C. Ex. Registration number, are cited

below : –

Service Tax has been paid in the wrong accounting code

of a difference service than which is rendered, where the

mistake has occurred under same registration number.

Service Tax has been paid against incorrect Accounting

Minor Heads of Education Cess, interest, penalty Secondary

Higher Education Cess and or vice versa. For eg : interest paid

under Secondary Higher Education Cess, etc.

Service Tax has been paid against the STC number of

another assessee/same assessee‟s (having multiple

registrations) different registration number.

Service Tax has been paid against Central Excise

Registration number of the assessee instead of Service Tax

Code Number or vice versa (major heads-Customs-037, Central

Excise-038 and Service Tax-044).

Service Tax has been paid against cancelled/surrendered

registrations on obtaining centralized registration.

In such instances, in order to ensure uniformity and to

avoid hardships to the assessees, the following procedure is

prescribed to be followed by the assessee and the field

formations.

Case 1. The assessee should represent (Through Range and

Division) to the Commissioner of Central Excise and Service

Tax, describing the mistake occurred/reasons for such errors

along with certified copies of the remittance challans, ST-3

Returns for the relevant period and any other document

pertains to the issue to establish the genuine mistake and to

ratify the error.

Case 2. Same as above.

Case 3. The assessee should obtain a no objection Certificate

from the assessee or any other person against whose

registration number to which the wrong remittances have been

made by e-payment to transfer the amount from their

registration number, certified by the concerned Range Officer of

Central Excise/Service Tax that the said amount has not been

utilized or paid by him and does not surface in his ledger (Books

of accounts) and attach with the representation besides the

documents enumerated against Case I above.”

As may be observed, para No. „3‟ and para No. „Case-3‟ of the said Trade

Note squarely cover the situation obtaining in the present case and lay

down a procedure for rectification of such mistake.

  1. In the present case, there is complete absence of mala fide and the

mistake was brought to the notice of Revenue by the appellant itself. In

effect, essentially, overall there has not been any short or delayed

payment of service tax by appellant. In these circumstances, the question

of penalties would not arise. In these circumstances, even the question of

interest would not arise in the wake of C.B.E. & C. Circular dated 20-5-

2013 cited above. We are of the view that the procedure prescribed by

the Cochin Commissionerate in its Trade Notice dated 10-7-2014 is

reasonable for the purpose of rectification of such mistakes without any

risk to Revenue.

  1. In the light of the foregoing discussion, we set aside the impugned

order, allow the appeal and remand the case to the primary adjudicating

authority with the direction that the necessary adjustment of the 

impugned amount of Rs. 25 lakhs be done in accordance with the

procedure prescribed in the Cochin Commissionerate Trade Notice dated

10-7-2014 cited above.”

  1. M/s. Western Coalfields Ltd vs. Commissioner of Excise & Service Tax –

2019 (4) TMI 1075 – CESTAT Mumbai.

“5.

In the instant case it is not denied the appellants have not paid

Clean Energy cess. The only mistake was the wrongful mention of the

assess code. The assessee code mentioned also pertains to the

appellants themselves. It is not the case of the department that the

code used is not in existence or is in defunct. We find that the Tribunal

has held that payment of tax is a wrong code will not make the payment

null and void as in the cases of CCE & ST V/S. K.K. Kedia 2014 (35)

STR 383 (Tri. Del) and Sahara India TV Network vs. CCE & ST Noida-

2016 (41) STR 145 (Tri. Del). We also find that Gujarat High Court has

held similarly in the case of Devang Paper Mills Pvt Ltd vs. Union of

India – 2016 (41) STR 418 Hon‟ble High Court of Gujarat held that “

whatever be the accounting difficulty, when undisputed fact is that

the petitioner did pay a certain excise duty, merely mentioning

wrong code in the process, cannot result into such harsh

consequence of entire payment not being recognized as valid, incurring

further liability of repayment of the basic duty with interest and

penalties. Such amount was deposited in the petitioner with the Govt.

Of India, and it was duly credited in the Government Account. We also

find that Calcutta High Court in the case of Affulent Water Treatment

Engineers Private Limited Vs. Union of India – 2016 (41) STR 790 (Cal.)

has held similarly and upheld by the Supreme Court in the case of

Commissioner vs. South Asian Petrochem Limited – 2010 (252) ELT A73

(SC).

In view of the above, we find that there is no case made out by the

department against the appellant. As long as the duty is paid and credited

duly to the Govt. Of India account, procedural infractions which are

curable in nature will not nullify such payments. Demanding such duty

second time is certainly harsh and has no sanction of law, more so along

with interest and penalty. Therefore, we set aside the impugned order.” 

  1. Auro pumps Pvt Ltd vs. UOI- 2017 (7) TMI 24 (Guj. HC)

“10. We are of the considered view that when authorities‟ stand became

very clear from the communication at page- 102 and reply that there

exists no demand of duty or any sum payable from the petitioners so far

as assessee code No.001 is concerned and when the authority has also

knowledge that there was a mistaken payment made under challan,

which contained incorrect code i.e. Code no. 001, though it belonged to

present assessee , who also has Code No. 002 also and who

unequivocally intended to make payment demand, which was payable

to him and which was paid, though mistakenly under wrong code i.e.

Code No. 001, could not have been subjected to technical defect on

the part of authority , so as to saddle with liability and the judgments

of this Court in case of Devan Paper Mills Pvt Ltd (Supra) cited at bar

would help the case of the petitioners, as the observations made in said

decisions do squarely cover the current situation.

In that view of the matter, without making much reflection upon

the findings of the authority, we are of the view that this is a case of

issuing appropriate madamus for calling upon the authorities to treat

the payment of Rs. 5,10,573/- against Code No. 002 from the date on

which, it was paid resulting into exempting the petitioners from any

coercive liability of so called non-payment against Code No. 002. All the

communications and order, which are impugned in the petition are

hereby quashed and set aside. The petition, thus, is allowed. Rule is

made absolute to aforesaid extent. No order as to costs.”

  1. M/s Falah Steel vs. UOI – 2016 (6) TMI 924 (Guj. HC)

“ 3. As noted , facts are not in dispute a at all. The petitioner has

excise duty liability of Rs 5,04,700/ for the month of March, 2014. The

petitioner paid such sum electronically on 31.03.2014. Instead of

central excise code, the petitioner‟s clerk put the code of service tax.

Whatever be the internal instructions of the department, the amount not

due under a head cannot be appropriated leaving the actual dues

unpaid. The department cannot appropriate sum towards the head where

there was no liability for the petitioner to pay the tax. If the petitioner is

now made to pay said sum of Rs. 5,04,700/, that would be double

recovery by the Government, which would be wholly unauthorised.

Under the circumstances, the respondents are directed to adjust

the petitioner‟s payment of Rs. 5,04,700/ for its excise liability for the

month of March,2014. Petition is disposed of accordingly.”

From the above judgments and board circular cited it is settled that merely

because the service tax paid under different registration but by the same

company, cannot be tent a mount to non- payment of service tax. Hence,

the demand of service tax which was already paid cannot be made twice.

Accordingly, demand of service tax in this case is also not sustainable.

Revenue is at liberty to made necessary adjustment in their account if

required.

The impugned order is set aside appeal is allowed.

(Pronounced in the open court on 03.02.2023)

RAMESH NAIR

MEMBER (JUDICIAL)

RAJU

MEMBER(TECHNICAL)

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