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
- 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:-
- 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.”
- 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.
- 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.
- 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.
- In view of the above, appeal is rejected.”
- 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.
- 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.
- 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.”
- 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.”
- 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.”
- 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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