facebook sharing button Share
twitter sharing button Tweet
email sharing button Email
sharethis sharing button Share
linkedin sharing button Share
11 May 2016

Service Tax wrongly paid on the Manufacturing Activity is Allowed to be Adjusted against Excise Duty

In the case of Hyva India (P.) Ltd. v. Commissioner of Central Excise, Customs & Service Tax, Bangalore-I (2016) 68 taxmann.com 383 (Bangalore - CESTAT), the assesee was a job-worker and he wrongly paid service tax on activity amounting to manufacture. Since revenue was happily accepting the same, the assessee was under a bona fide impression that activity was not liable to excise duty.

However, later on department argued that activity of the assessee amounts to manufacture and hence, mounting charges were includible in excisable value. Thus demand of excise duty was confirmed by invoking extended period of limitation.

On the appeal filed to Bangalore CESTAT, it was held that extended period is available only when an assessee acts with a mala fide intent and there is a positive suppression or mis-statement with intent to evade duty. Since payment of service tax on activity rules out mala fide intent of assessee and otherwise also, assessee could have availed job-work exemption. Thus in any case, duty paid could be availed as credit by principal and therefore, demand is revenue neutral. Hence, extended period was not invocable and ultimately, while determining excise duty demand, benefit of service tax, already discharged by assessee, would be given to them and their liability would be neutralized to that extent.