https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=769152 https://www.taxtmi.com/caselaws?id=769152 Liability to service tax on CENVAT Credit availed for input services used exclusively for providing exempted services, specifically the commission paid for exempted insurance policies - CENVAT Credit for services rendered in the non-taxable territory of Jammu & Kashmir - Extended period of limitation. CENVAT Credit for services rendered in the non-taxable territory of Jammu & Kashmir - HELD THAT:- From the License, it is seen that it is a general license to operate as an Insurance Agent. Such agent may procure Insurance business requiring Service Tax payment or which may be exempt from payment of Service Tax. Thus, this License is used as a whole and there are no separate Licenses issued for procuring taxable and exempt insurance business - It is observed that in respect of insurance of the person under Kisan Credit Scheme, the Service Tax is exempted. Liability to service tax on CENVAT Credit availed for input services used exclusively for providing exempted services, specifically the commission paid for exempted insurance policies - HELD THAT:- When the input service is commonly used for providing both the taxable and exempt services, then the CENVAT Credit should either be reversed on proportionate basis in terms of Rule 6 (3A) or the assessee should pay six percent of the value of the exempted services in terms of Rule 6(3)(i) of the said Rules. Thus, there is no bar to take the CENVAT Credit in respect of commonly used input services, so long as one of these two options are followed by the assessee. The only bar is when the service is used exclusively for providing exempted services. In the present case, from the documentary evidence it is clear that the Agent is providing both the services commonly. Therefore, the Invoice raised by him showing the Service Tax component may consist of both the taxable and exempt insurance services. This would fall under the category of common service and not under the category of exclusively exempt service. The Revenue has not brought in any specific evidence to show that the Insurance Agent is rendering services to such exempted product for which they have raised any Invoice showing the Service Tax payment thereon, which has been taken as CENVAT Credit by the appellant. Extended period of limitation - HELD THAT:- There are considerable force in the arguments of the appellant about the non-applicability of suppression clause in their case. First of all, they are a reputed Public Sector Undertaking. They have filed all their statutory Returns under Service Tax and Income Tax and under the Companies Act provisions, before the respective authorities. Knowing fully well they are not in a position to maintain separate accounts, they have taken the CENVAT credit commonly accruing to them in respect of the taxable and exempt insurance services and have been regularly reversing the CENVAT Credit in terms of Rule 6 (3)(i), which is also reflected in the ST-3 Returns. Hence, no case whatsoever, has been made against the appellant for wilful suppression, with an intent to evade payment of Service Tax. Therefore, the confirmed demand to the extent of the extended period is legally not sustainable. Conclusion - i) In respect of common input services, the appellants have been regularly reversing the CENVAT Credit in terms of Rule 6(3)(i) of CCR 2004. ii) The Department has not brought in any evidence to the effect that the appellant has taken CENVAT Credit in respect of any input service which is exclusively used in the provision of exempted services. iii) The documentary evidence brought in by the appellant shows that the Insurance Agent is authorized to take up both the taxable and exempted insurance services. iv) The confirmed demand to the extent of the extended period is legally not sustainable. The appeal is allowed on merits and partly on account of time bar. Case-Laws Service Tax Wed, 16 Apr 2025 00:00:00 +0530