MANU/DSTX/0004/2023

Ministry : Ministry of Finance

Department/Board : Central Board of Indirect Taxes and Customs

Instruction No. : CBIC-240137/20/2022-SERVICE TAX SECTION-CBEC

Date : 21.03.2023

TO,

1. Pr. Chief Commissioner/Chief Commissioner, CGST & CX (All)

2. Pr. DG/DG (All), DGGI

3. Pr. Commissioner/Commissioner, CGST&CX (All)

4. Webmaster@cbic.gov.in

Sir/Madam,

Payment of Service Tax by Department of Posts and Ministry of Railways by way of book adjustment

Please refer to above subject.

As you are aware, Board had earlier noted that the practice of payment of Service tax by way of book adjustment adopted by the Department of Posts and the Ministry of Railways was leading to incorrect accounting and reporting as the tax payments could not be reconciled by the field units of CBIC. Book adjustment practice was also unable to provide a service wise, jurisdiction wise segregation of Service tax dues and was posing difficulties in conduct of audit.

2. Accordingly, the then Member (ST) vide DO letter F. No. 137/08/2013-Service Tax dated 21.04.2014 informed the Department of Posts and Ministry of Railways that the practice of payment of Service tax by way of book adjustment by both Ministries is contrary to the provisions of Finance Act, 1994 and Service Tax Rules and also to the Government Accounting Rules, 1990. Accordingly, it was requested to adhere to provisions of the Finance Act, 1994 by paying duty/tax electronically through the NSDL portal or ACES portal. The Controller General of Accounts was also requested to render necessary assistance to the Department of Post and Ministry of Railways for aligning their payment procedure accordingly.

3. Consequent to this and even prior to that, certain field formations under CBIC had raised objections to above practice of tax payment and have issued show cause notices demanding duty/tax, otherwise paid by way of book adjustment. Board has also noted that there are different practices in field in accepting book adjustment as a valid mode of payment. The show cause notices issued to demand the Service Tax/Central Excise duty by some field formations are at different levels of adjudication. A reference in this regard has also been received from the Ministry of Railways in which the demands have been confirmed.

4. Board has examined the issue. While there has been no change in the legal position of the method of duty payment, Board has taken note of the difficulties in reversal of book entries of the Service Tax paid by way of book adjustment and re-payment through ACES/NS........