Order Date – 09 February 2023

Parties: M/s. Aircel Limited Vs The Commissioner of Central Excise and Service Tax

Facts –

• The Appellant, M/s. Aircel Limited, provides telecommunication service in the areas comprised in the jurisdiction of the State of Tamil Nadu except Chennai City. In the territorial jurisdiction of Chennai City, such service is provided by their associate company viz., M/ s. Aircel Cellular Limited (ACL).
• They have a common recharge facility in order to provide flexibility to customers. The amount due to each of these companies was settled between these companies through credit notes raised on each other. The appellant revised the return for the period on 03.07.2008 along with a letter dated 30.06.2008 explaining the circumstances under which the revised return was filed. They also furnished copies of the credit notes raised.
• A show cause notice dated 01.07.2009 was issued to the appellant proposing to demand the short­ paid Service Tax along with interest and also for imposing penalties on the ground that the appellant had contravened the provisions of Rules 6(3), 6(4) and 6(4A) of the Service Tax Rules, 1994 since they had wrongly adjusted the excess paid Service Tax towards the payment of Service Tax pertaining to a latter period.

Issue –

• Whether the adjustment of the Service Tax towards the Service Tax liability for the subsequent period, is in accordance with the provisions of Rule 6(3) of the Service Tax Rules, 1994 or not?

Order –

• The tribunal observed that since only one of the companies had provided the service, and the tax was paid by both companies on the same consideration received, they have adjusted the gross amounts by issuing Credit Notes.
• The assessee having transferred the consideration received from the customer along with tax to the other company who has provided the services, is saved from the principle of unjust enrichment. The requirement of refund in Rule 6(3) is to satisfy the condition of unjust enrichment and not to make the customer unjustly enriched.
• The Tribunal relied on the decision in the case of M/s. ACL vide Order-in-Original No. 68/2011 dated 30.11.2011, it was held that purpose of introduction of Rule 6(3) i.e. adjustment of service tax, is to provide instant relief to the assessees when services are not provided either wholly or partially for any reason. The condition prescribed therein i.e. refund of the value along with service tax to the customer, is to ensure that there is no unjust enrichment by the assessee. 
• Hence the appeal is allowed.