2018 (7) TMI 89 – CESTAT CHENNAI – TMI – Short payment of service tax – national roaming charges – appellants have provided such service to other mobile telecom operators and also received such services from other operators – revenue neutral situation – Held that:- There is nothing brought out from the records that the appellant has falsified any records or availed wrongful credit by any act of fraud. There is nothing brought forth by the department to show that appellants are not eligible for credit of service tax paid on services received by them from other mobile phone operators. When they are eligible for credit, the entire situation is revenue neutral one. It is clear that it was an error in the accounting pattern.
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The short payment of service tax was only due to an error in the accounting pattern for the impugned period. Even if the appellants had paid service tax, they would be eligible for credit and the whole situation would be of no revenue loss.
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Demand do not su
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tors who received the services. They also received bills from other mobile telecom operators from whom the appellants received such service. During the impugned period, instead of paying service tax on the entire gross amount received by them for the services provided, appellants had paid service tax only on the differential value, ie., difference in value between invoices raised on other mobile telecom operators by appellant and invoices raised by other mobile operators on appellants. Such method resulted in short payment of service taxa SCN was issued proposing to demand differential amount of service tax along with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalty under Section 76 of the Finance Act, 1994. In appeal, the Commissioner (Appeals) upheld the same. Hence this appeal. 2. On behalf of the appellant, the I-de Counsel, Shri Raghavan Ramabhadran appeared and argued the matter, The oral
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ebiting it to the 'Cenvat credit account of the appellant. c) The total liability of the appellant during the impugned period is ₹ 1,01,93,193/- The appellant was eligible for credit on national roaming services to the tune of ₹ 49,54,664/- The appellant discharged the differential liability of tax of ₹ 52,38,529/- by debiting, the credit eligible. Instead of paying service tax of ₹ 1,01,93,193/- the appellant paid only ₹ 52,38,529/- debiting the balance payable in the 'service tax payable amount' instead of debiting the Cenvat credit account. This was only an error in the manner of accounting and on coming to know of the mistake had immediately rectified the same. d) The instant case is not one of Revenue loss. The present case is one where, had the appellant discharged service tax on the entire gross receipts, the credit eligible to them would have been availed and utilized towards output service tax liability. Therefore, the entire exercise
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emption would have added in more scriptory work to the assessee, without resulting in any revenue earning or loss to the department. He pleaded to set aside the demand since attributable only due to procedural or accounting error. 3. Against this, the Ld. AR, Shri K. Veerabhadra Reddy, JC, reiterated the findings in the impugned order. He submitted that the plea of revenue neutrality was not put forward by the appellant before the adjudicating authority. The said issue has been discussed by the Commissioner (Appeal) in para 4.8 of the impugned order. The Commissioner (Appeals) has also discussed in the very same para that the appellant would not be eligible for Cenvat credit because the cell phone company with whom the subscriber is registered should collect the service tax from the subscriber irrespective of the adjustment/sharing of the bills with other companies whose services are utilized by the subscriber for roaming facilities. The appellant have not clarified as to why the roami
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payable" instead of debiting in their Cenvat credit account. The appellants are eligible to avail Cenvat credit on service tax paid on national roaming services received by them from other mobile operators. Instead of debiting in Cenvat account, the tax payable by them on the services provided, the appellants debited in the service tax payable account. They contend that it was only an accounting error and there was no intention to avail credit wrongly or to evade payment of tax. The Ld. Counsel has strongly argued that the entire situation is revenue neutral one for the reason that as the appellant paid service tax for the roaming services received from other mobile operators the same would be eligible as Cenvat credit for discharging the tax liability on the amount received by them for the services provided. The demand has been raised only for the very short period from August 2007 to January 2008. On being pointed out the defect in such accounting pattern, the appellant has rec
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In fact, in SCN as well as OIO it is stated that appellant would be eligible for credit. The Commissioner (Appeals) has disallowed the plea of revenue neutral situation stating that it is a new plea put forward by the appellant which we find is incorrect. The appellant has put forward such plea even in the reply to the SCN and therefore the plea is not a new one raised before the first appellate authority. The Commissioner (Appeals) has thereafter wrongly proceeded to deny the credit to the appellant. There is no proposal in the SCN to deny eligibility of credit. In fact, in para 3.4 of the SCN, it is alleged that the appellant can very well take credit on the service tax paid by them for the services received by them. We therefore conclude that appellant being eligible to credit, the situation is revenue neutral one. 6. From the foregoing discussions, we are convinced that the short payment of service tax was only due to an error in the accounting pattern for the impugned period. Eve
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