2021 (3) TMI 614

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....)(iii) of the Service Tax Rules, 1994. Alleging that the appellant had failed to include the value of expenses reimbursed to the agents, namely, travel, conveyance and vehicle running expenses, training expenses, printing and stationary, and business development/marketing and sales promotion expenses in the gross taxable value; secondly, also the appellant had wrongly collected service tax from the insurance agents which they have paid under reverse charge basis in terms of rule 2(1)(d)(iii) of Service Tax Rules, 1994, thereby contravened Section 73A(2) of Finance Act, 1994, show cause notices were issued to them from time-to-time for the period from 01.4.2011 to 31.3.2015 proposing recovery of service tax totaling to Rs. 7,52,31,926/- along with interest and penalty. On adjudication, demands have been confirmed with interest and penalty. Hence, the present appeal. 3. Learned Advocate, Shri Bharat Raichandani, for the appellant submits that as far as allegation of non payment of service tax on the gross taxable value of the commission paid is concerned, in the instant case, expenses incurred by the agents and reimbursed by the appellant, cannot be construed as amounts charged by t....

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.... 7. We have carefully considered the submissions advanced by both the sides and perused the records. 8. Two issues are involved in the present appeal for determination, which are: (i) Whether the expense incurred by the agents, namely, travel, conveyance and vehicle running expenses, training expenses, printing and stationary, and business development/marketing and sales promotion expenses are to be part of the gross taxable value in discharging service tax by the appellant. (ii) Whether the service tax amount initially paid by the appellant under rule 2(1)(d)(iii) of Service Tax Rules, 1994 and later adjusted with the commission paid to the agents to be deposited under Section 73A(2) of the Finance Act, 1994. 9. As far as the first issue is concerned, the expenses incurred by the insurance agents are proposed to be included and under Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 which was in force during the relevant time. The said Rule 5(1) has been struck down by the Hon'ble Delhi High Court as ultra vires to Section 66 and 67 of Finance Act, 1994 and the said judgement has been upheld by the Hon'ble Supreme Court in Intercontinental Consultants and Te....

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.... of Section 67. We, therefore, find that High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider 'for such service' and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service. 25. This position did not change even in the amended Section 67 which was inserted on May 1, 2006. Sub-section (4) of Section 67 empowers the rule making authority to lay down the manner in which value of taxable service is to be determined. However, Section 67(4) is expressly made subject to the provisions of sub-section (1). Mandate of subsection (1) of Section 67 is manifest, as noted above, viz., the service tax is to be paid only on the services actually provided by the service provider. 26. It is trite that rules cannot go beyond the statute. In Babaji Kondaji Garad, this rule was enunciated in the following manner : "Now if there is any conflict between a statute and the subordinate legislation, it does not require elaborate reasoning to firmly state that the statute prevails over s....

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....finds in a work of fiction/non-fiction or even in a judgment of a court of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of "interpretation of statutes". Vis-a-vis ordinary prose, a legislation differs in its provenance, layout and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. 28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retros....