India: Service tax not due after presentation of cheque for its payment

July 12, 2018

Service Tax


Sustainability of the demand of interest in question

The Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as “the Tribunal”) at Delhi, in a recent order held that in case of payment of service tax, where the assessee pays the amount through cheque, the date of presentation of such cheque is the date of payment of service tax.

This view of the Tribunal in the instant case of D. B. Corp. Ltd. v. Commissioner of Central Excise Tax, Bhopal, (Excise Appeal No. 51781 of 2018 -SM) has reiterated the view of the said Tribunal in the case of
Travel Inn India Pvt. Ltd. vs. CST, Delhi [2016 (41) STR 236 (Tri- Del)].

In the case of D. B. Corp there were two major issues which had reached the Tribunal after an appeal for the same had been dismissed by the Learned Commissioner (Appeals).

The first issue was the discrepancy in the amount mentioned in ST -3 Return filed by the Appellant. The Appellant submitted their service tax returns (as required under Section 70 of the Finance Act, 1994 and Rule 7 of the Service Tax Rules, 1994 in Form ST -3). However, the assessing authority observed that there was some discrepancy with regard to the amount mentioned in ST-3. Consequently, a show cause notice was issued to the Appellant to demand service tax on the differential value of the amount shown in the ST-3 return. The Learned Counsel for the Appellant submitted that the discrepancy was due to a clerical error. It is observed later in the Tribunal’s order, that the Appellant had duly submitted supporting documents 26 days before the order by the Learned Commissioner was delivered. The Learned Commissioner is ordered to revisit the matter and consider the documentation submitted for its review.

The second issue for consideration in the instant case was the one wherein the view of the Tribunal in the Travel Inn case was reiterated. Since, there was an alleged ‘delay’ in payment of service tax, demand of interest was confirmed for the period between the date on which the cheque was presented for payment of service tax and the date on which it was credited in the account of Government treasury.

The Tribunal observed that according to Rule 6 (2A) of the Service Tax Rules, 1994
‘if the assessee deposits the service tax by cheque, the date of presentation of cheque to the bank designated by the Central Board of Excise and Customs for this purpose shall be deemed to be the date on which service tax has been paid subject to realization of that cheque.’ The Learned Counsel for the Appellant also relied upon the Tribunal’s view in in the case of Travel Inn India Pvt. Ltd. vs. CST, Delhi [2016 (41) STR 236 (Tri- Del)].
Therefore, it was held that the demand of interest is not sustainable on the Appellant.

The case was sent back to the Learned Commissioner (Appeals) for considering the documents filed by the Appellant within 30 days from the Order of the Tribunal and for passing an appropriate the order in accordance with the law.

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