TaxTMI 
TaxTMI 
2023 (5) TMI 339
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....mbai (DICGC), herein shall be referred to as the 'assessee' and the respondent Commissioner of Central Excise & Service Tax, Large Tax Payer Unit (LTU), Mumbai herein shall be referred as the "Revenue / department". FACTUAL MATRIX: 3.1. The assessee is a subsidiary of Reserve Bank of India (RBI), which was established under the Deposit Insurance Credit Guarantee Corporation of India Act, 1961 for the purpose of ensuring safety of deposits held in commercial banks, cooperative banks, Regional Rural Banks etc., by providing insurance of deposits and guaranteeing credit facilities. DICGC insures all bank deposits, savings, fixed, current and recurring deposits upto the prescribed limit per deposit in a bank. DICGC pay service tax on premium collected from the insured banks for insuring such deposits. For this purpose, DICGC is registered with jurisdictional Service Tax Commissionerate vide registration No. AAACD2094ESD001, under the category of 'general insurance business' service under section 69 of the Finance Act, 1994. They are also holders of LTU membership vide No. LTU/MUM/0113. 3.2. The assessee after taking service tax registration on 28.03.2012 filed their first ST-....
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....nterest Appropriation of demand before its confirmation held illegal. O-in-O set aside to this extent. Dept.'s appeal rejected. Refunds allowed. LTU/MUM/ST/GLT5/ANK-18/R/2014 dt. 01.08.2014 issued on 04.08.2014. April, 2013 to Sept. 2013 27,17,88,920 Refund of Rs. 27,17,88,920 sanctioned and part amount appropriated for Rs.19,29,66,692 against outstanding arrears of interest Appropriation of demand during the pendency of stay application before CESTAT held illegal. Interest amount is not appropriated twice, in view of the above two orders having been set aside, as above. LTU/MUM/ST/GLT5/ANK-12/R/2014 dt. 08.07.2014 Inclusion of Service tax in premium 10,99,93,595 Refund claimed, on the basis of premium collected as cum tax value, was rejected Gross amount of premium is inclusive of Service Tax. Dept. appeal was set aside and Party's appeal allowed F. No. LTU/MUM/ CX/DICGC/23/ 2008-Pt.II dt. 14.07.2015 06.11.2012 to 23.08.2012 19,29,66,692 Demand of interest was confirmed by Order-in-Original dt.11.04.2014. Appeal by party is infructuous. 3.3. While dealing with the issues arising out of the five appeals filed by the party and the ....
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....unt at any rate lesser than that prescribed by RBI. It is also observed that since DICGC is precluded from collecting any amount as premium in excess of the rate prescribed by RBI. This also implies that the service tax liability required to be discharged by DICGC on this premium cannot be collected over and above the premium amount. Hence, the premium amount collected has to be necessarily considered as inclusive of the service tax element. ... 8.3. As per the provisions of sub-section (2) of section 73 of the Finance Act, 1994 only after the concerned officer have considered the representation made by noticee on whom show cause notice is served under sub-section (1) of section 73 of the Finance Act, 1994 and determined the amount payable by him, the recovery provisions of Section 87 ibid would come into play. Since no such determination having been done and the proceedings being at the stage of show cause notice which is not concluded, no amount is payable by DICGC to the credit of the Central Government and therefore, the amount of refund sanctioned in Order-in-Original No. LTU/MUM/ST/GLT-5/ANK32/R/13-14 dt. 12.02.2014 and Order-in-Original No.LTU/MUM/ST/GLT-5/ANK-33....
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....d 01.08.2014 towards interest liability. Since such appropriation of refund amount towards interest liability has been found to be erroneous by me in the foregoing paras, this appeal filed by DICGC have been rendered infructuous". 3.5. On the basis of above conclusions, the Commissioner of Central Excise (Appeals), LTU, Mumbai had passed the following order. Extract of the same is below: '11. In view of the above findings I order as under: (a) I reject the appeals filed by the Department against Order-in-Original No. LTU/MUM/ST/GLT-5/ANK-32/R/1314 dt. 12.02.2014 and Order-in-Original No. LTU/MUM/ST/GLT-5/ANK-33/R/13-14 dt. 12.02.2014. (b) The appeals filed by DICGC against Order-in-Original No. LTU/MUM/ST/GLT-5/ANK-32/R/13-14 dt. 12.02.2014 and Order-in-Original No. LTU/MUM/ST/GLT-5/ANK-33/R/1314 dt. 12.02.2014 are allowed and the said orders to the extent it appropriates Rs.26,50,512/- and Rs.18,93,80,153/- towards unconfirmed interest liability are set aside. The amount of refund sanctioned to DICGC in these two Order in Originals shall be paid to them forthwith. (c) I allow the appeal of DICGC filed against Order- in- Original No. LTU/MUM/ST/GLT-5/ANK-18/R/2014 date....
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.... Rs.8,70,712/- and not for 110 days for the period 06.05.2012 to 23.08.2012 as Rs.12,12,383/-. Appeal No. ST/85937/2016: The assessee claims that in the impugned order, as against the appeal made by them that the amount demanded have been adjusted by the department second time against the refund amount sanctioned, the findings given by the Commissioner of Central Excise (Appeals), LTU, Mumbai, is erroneous. On the prayer made by the assessee that the Assistant Commissioner should rectify the defect and grant refund on the above issue of adjustment of the same amount for second time, no findings have been given by the Commissioner of Central Excise (Appeals), LTU, Mumbai. 4.2. Further, the Revenue having its objections against the impugned order, reviewed the impugned order through the Committee of Commissioners and Revenue had also filed the following appeals. The details of these appeals and the gist of the grounds claimed by the Revenue are as follows: Appeal No. ST/86257/2016: The Department had filed an appeal against the impugned order claiming that the appellate authority has erroneously held that the gross amount of premium is to be treated as cum-tax since DICGC has ....
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....the Finance Act, 1994, Hon'ble CESTAT should remand the case to Commissioner of Central Excise (Appeals), Mumbai-I C. Ex and Service Tax, LTU, for reconsideration and to pass such order as deemed fit? (d) Whether the CESTAT should pass any order as may be appropriate? 4.3. The Chartered Accountant representing the assessee explained their stand on various grounds during the hearing before this Tribunal in detail besides providing detailed written submissions on the various appeals as follows: (i) the assessee had addressed to the Assistant / Deputy Commissioner of Central Excise that the adjustment of refund against the demand of Rs.19,29,66,692/- for the second time in Order-in-Original dated 01.08.2014 is a mistake apparent from the records, and hence sought for a direction from the first appellate authority. However, the Commissioner of Central Excise (Appeals), LTU, Mumbai in his order rejected the appeal of the assessee on the ground that he had already held that the adjustment of interest amount demanded against refund sanctioned is erroneous, therefore this appeal of the assessee is infructuous. Hence, the Chartered Accountant representing the assessee prayed that this....
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....ax liability over and above the amount of premium collected by DICGC as insurance premium (ii) though it was concluded in the impugned order that the show cause notice proceedings for demand of interest on delayed payment of service tax for Rs.19,17,54,309/- vide notice dated 31.01.2013 and for Rs.12,12,383/- vide notice dated 25.06.2013, could not have been appropriated against unconfirmed demand, these were duly confirmed subsequently as adjudged demands besides imposition of penalty, in the order in original No.01-02/COMMR(WLH)/LTU-M/CX/2014 dated 11.04.2014. (iii) Since both the parties have made rival claims in the matter for determination of interest on delayed payment of service tax and on the cum-tax value, to serve their respective causes, it was prayed that the matter may be remanded to Commissioner (Appeals), for determination of the issues raised by the Department and the assessee. 5. Heard both sides and perused the records of the case. Issues that require consideration by this Tribunal, in the instant case, are as follows: (i) Does the deposit insurance premium collected by the appellants DICGC for the disputed period October, 2011 t....
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....services rendered by DICGC came to be examined by the department. They were asked, vide letter dated 7/7/2008 to take out service tax registration and pay service tax and also furnish information relating to income earned by them from 1/5/2006. 2.3. DICGC sought exemption from service tax by their letter dated 01/08/2008, which was rejected by the Finance Ministry by letter dated 05/01/2009. In the meantime, CBEC, by its letter dated 1/12/2008 confirmed that the services provided by DICGC were covered under General Insurance Businessw.e.f. 01/05/2006. DICGC was reminded to furnish the information sought for from them by letter dated 16/10/2008. However, DICGC did not comply with the request but contested the levy by their letter dated 28/11/2008. Department addressed similar letters to DICGC on 10/12/2008, 1/1/2009 and 29/1/2009. 2.4. DICGC, by their letter dated 14/01/2009, took up the matter with Finance Ministry, who issued a clarification vide letter dated 24/2/2009 to the effect that the charges collected by DICGC are not taxable under the taxable service of General Insurance Service. This view was reiterated by CBEC letter dated 22/4/2009. 2.5. The LTU, Mumbai expres....
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....g levy of service tax on the deposit insurance activity undertaken by the appellant DICGC duly covered under the taxable service category of 'general insurance business' service as defined in section 65(49) and that service tax is liable to be paid under Section 65(105)(d) of the Finance Act, 1994 has been settled in favour of the department. Further, the said earlier order of this Tribunal had made it clear that service tax is payable on the said the service provided by the appellant DICGC from 20.09.2011 onwards. 6.3. We also find that in arriving at this decision, this Tribunal had considered the facts of the case on record, and also the fact that various representations made by the appellants to the government vide their letters dated 05.01.2009 and 14.01.2009, and the applicability of service tax to the appellants DICGC was examined by the Central Board of Indirect Taxes and Customs (CBIC). On examination of the provisions of the DICGC Act, 1961, it was clarified by the CBIC vide letter No.354/164/2008-TRU dated 24.02.2009 that DICGC is not taxable under the taxable service of 'general insurance business'; this view was reiterated by CBIC letter dated 22.04.2009. Howeve....
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....inance Act, 1994 as amended: '67(2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as with the addition of tax payable, is equal to the gross amount charged.'." 7.2. We also find that the matter was appealed before the Hon'ble Supreme Court by the department, and the Supreme Court Bench comprising Hon'ble Mr. Justice S.H. Kapadia and Hon'ble Mr. Justice B. Sudershan Reddy on 13-10-2008, after condoning the delay dismissed the Civil Appeal No. D 23523 of 2008 filed by Commissioner of Central Excise & Customs, Patna against the CESTAT Final Order Nos. A/355-356/KOL/2008, dated 19-3-2008 in the case of Advantage Media Consultants (supra), While dismissing the appeal, the Supreme Court passed the following order: 'Delay condoned. The Civil Appeal is dismissed.' The Appellate Tribunal in its impugned order had upheld the remand order of Commissioner (Appeals) where cum-tax benefit was directed to be given. The party was rendering Advertising Agency service and Service tax was not collected for services rendered to ....
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.... duty of excise. Under Section 4(1), the duty of excise is chargeable on any excisable goods with reference to the value which is deemed to be the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade where the buyer is not a related person and the price is the sole consideration for the sale. Section 4(4)(d)(ii) states that value in relation to any excisable goods does not include the amount of duty of excise, sales tax and other taxes, if any, payable on such goods and, subject to such rules as may be made, the trade discount, etc., is also to be allowed as a deduction. A reading of the aforesaid Section clearly indicates that the wholesale price which a charged is deemed to be the value for the purpose of levy of excise duty, but the element of excise duty, sales tax or other taxes which is included in the wholesale price is to be excluded in arriving at the excisable value. This Section has been so construed by this Court in Assistant Collector of Central Excise and Ors. v. Bata India Ltd., [1996] 4 SCC 563, and it is thus clear that when cum-duty price is charged, then in arriving at the excisable value of the goods ....
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....e amount of excise duty is included in the price charged by the dealer or is shown as a separate item in the bill. In either case, it would be part of the 'sale price'.........." The example given in the aforesaid decision is clearly applicable in the present case. The sale price realised by the respondent has to be regarded as the entire price inclusive of excise duty because it is the respondent who has, by necessary implication, taken on the liability to pay all taxes on the goods sold and has not sought to realise any sum in addition to the price obtained by it from the purchaser. The purchaser was under no obligation to pay any amount in excess of what had already been paid as the price of the scarp. Under the circumstances, the Tribunal was right in directing that the respondent is entitled to the benefit of Section 4(4)(d)(ii) of the Central Excises & Salt Act. For the aforesaid reasons, this appeal is dismissed. No costs." 7.4. We further find from the records of the case, that the plea advanced by the department on the issue of cum-tax-value of premium collected for deposit insurance by the appellants DICGC, that such treatment of gross amount of pre....
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.... SECTION 68.Payment of service tax. - (1) Every person providing taxable service to any person shall pay service tax at the rate specified in section 66B in such manner and within such period as may be prescribed. (2) Notwithstanding anything contained in sub-section (1), in respect of such taxable services as may be notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66B and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service. Provided that the Central Government may notify the service and the extent of service tax which shall be payable by such person and the provisions of this Chapter shall apply to such person to the extent so specified and the remaining part of the service tax shall be paid by the service provider. SECTION 75. Interest on delayed payment of service tax.- Every person, liable to pay the tax in accordance with the provisions of section 68 or rules made there under, who fails to credit the t....
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....ernment by the 31st day of March of the calendar year. Provided also that in case of such individuals, partnership firms and one person companies whose aggregate value of taxable services provided from one or more premises is fifty lakh rupees or less in the previous financial year, the service provider shall have the option to pay tax on taxable services provided or agreed to be provided by him up to a total of rupees fifty lakhs in the current financial year, by the dates specified in this sub-rule with respect to the month or quarter, as the case may be, in which payment is received. Provided also that in the case of an assessee in the State of Tamil Nadu State of Tamil Nadu and the Union Territory of Puducherry (except Mahe & Yanam), the service tax payable for the month of November, 2015, shall be paid to the credit of the Central Government by the 20th day of December, 2015. Provided also that in case of online information and database access or retrieval services provided or agreed to be provided by any person located in a non-taxable territory and received by non-assessee online recipient, the service tax payable for the month of December, 2016 and January, 2....
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....l Excise or the Deputy Commissioner of Central Excise, as the case may be, giving reasons for payment of service tax on provisional basis and the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, on receipt of such request, may allow payment of service tax on provisional basis on such value of taxable service as may be specified by him and the provisions of the Central Excise Rules, 2002, relating to provisional assessment, except so far as they relate to execution of bond, shall, so far as may be, apply to such assessment. (4A)Notwithstanding anything contained in sub-rule (4), where an assessee has paid to the credit of Central Government any amount in excess of the amount required to be paid towards service tax liability for a month or quarter, as the case may be, the assessee may adjust such excess amount paid by him against his service tax liability for the succeeding month or quarter, as the case may be. (4B)The adjustment of excess amount paid, under sub-rule (4A), shall be subject to the condition that the excess amount paid is on account of reasons not involving interpretation of law, taxability, valuatio....
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....of completion of each such event as specified in the contract shall be deemed to be the date of completion of provision of service; (ii) wherever the provider of taxable service receives a payment up to rupees one thousand in excess of the amount indicated in the invoice, the point of taxation to the extent of such excess amount, at the option of the provider of taxable service, shall be determined in accordance with the provisions of clause (a). Explanation .- For the purpose of this rule, wherever any advance by whatever name known, is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of receipt of each such advance. 8.2. We find from the record, that the appellants DICGC have filed their first ST-3 return online on 25.04.2012 for the period from October, 2011 to March, 2012. We also notice from the ST-3 returns filed by the assessee for the period October, 2011 - March, 2012 of the financial year 2011-2012 filed on 18.07.2012, that the gross amount received as the value of taxable services is shown as Rs. 2603,51,60,801/- for the services rendered by the appellants DICGC and it is also shown as ....
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....able - 2 Calculation of interest under Section 75 of the Finance Act, 1994 for delay in payment of service tax during the period October, 2011 to March, 2012 Sr. No Particulars Interest in Rs. as per calculation made by Department Appellants 1 Gross amount received against services provided during October, 2011 to March, 2012 2603,51,60,801 2603,51,60,801 2 Service Tax payable including Cess 2,68,16,21,563 2,68,16,21,563 3 Service Tax actually paid by appellants 2,90,00,00,000 2,90,00,00,000 4 Excess payment made 21,83,78,437 21,83,78,437 5 Interest calculation @18% for 145 days (06.11.2011 to 30.03.2012) November - 2011 - 24 days December, 2011 -- 31 days January, 2012 -- 31 days February, 2012 -- 29 days March, 2012 -- 30 days Total --145 days 19, 17,54,309 - 6 Interest calculation @18% for 115 days (06.12.2011 to 30.03.2012) December, 2011 -- 25 days January, 2012  ....
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....advanced by the appellants DICGC. However, we donot have any other records such as invoice, receipts, online transactions summary, statement of accounts of the appellants DICGC for establishing the dates on which the payments were made by various banks towards deposit insurance premium that was collected by the appellants as gross amount of taxable services. In order to arrive at a conclusion on the correct date on which the service tax is due to be paid as per the provisions of Rule 6 of Service Tax Rules, 1994, with certainty upon confirmation of the facts, we feel that the matter should go back to the original Appellate Authority i.e., Commissioner of Central Excise (Appeals), LTU, Mumbai. 8.5. Therefore, we are inclined to allow the request of the appellants DICGC as well the request of the department for re-calculation of the interest on delayed payment of service tax taking into account the appellant's submissions on when the amounts received by them as deposit insurance premium; issue of invoices or any other documents indicating the completion of provision of services rendered by the appellants etc. We thus find that for achieving the above object, the issue needs to....
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....t appellate authority in his impugned order that during the pendency of stay applications before this Tribunal, no coercive action can be taken by the department is correct in principle. However, the factual detail in respect of the case whether it was actually pending on that date requires to be examined by the said first appellate authority. Further, we find that he has also rightly held that in terms of the departmental instructions vide CBIC's Excise Manual at par-III, Chapter 18, in para 1.3, it is stated that if the stay application is filed by an assessee against the Order in Original confirming the duty demand, no coercive action should be taken to realise the dues till the disposal of stay application by the Commissioner (Appeals) or the Appellate Tribunal, as the case may be. However, we find subsequently these vexatious issues have attained finality in terms of the earlier Order passed by the Tribunal on 11.03.2015. Hence, the appellants DICGC should have made an application before the jurisdictional Commissioner who could have re-determined the interest for the actual delay in payment of service tax. Though the first appellate authority rightly held that there is no gro....
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....ginal shall be paid to them forthwith. (d) I allow the appeal of DICGC filed against Order- in- Original No. LTU/MUM/ST/GLT-5/ANK-12/R/2014 dated 08.07.2014. The amount of Rs.10,99,93,595/- sought as refund shall be paid to them forthwith". However, in the light of the appeal filed by the department against the above rejection at (a) above and decision in favour of the appellants DICGC at (b) to (d) above, and taking into account the need for redetermination of the interest on actual delay in payment of service tax, as already decided in the earlier order of the Tribunal dated 11.03.2015, we find that the matter needs to be sent back to the first appellate authority, to determine the actual amounts of refunds of service tax payable to the appellants DICGC. 9.4. Hence, we find that the appellants DICGC may be given liberty to raise any issues before the Commissioner of Central Excise (Appeals), LTU, Mumbai, when the matter is remanded for denovo adjudication. Further, while taking up the matter in denovo proceedings for redetermination of the interest payable for actual delay in payment of service tax, the appellants DICGC shall be given reasonable opportunity of b....
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....e Ministry of Finance, review and modifications for coming to the conclusion that was clarified, it did not specifically provide the same in the form of an order or instructions or directions of CBIC in exercise of the powers vested in Section 37B of Central Excise Act, 1944 made applicable to Service Tax matters vide Section 83 of the Finance Act, 1994. We could only presume at this stage, that such a letter could have been issued by CBIC, directly addressing to the Chief Commissioner, Large Taxpayer Unit, Mumbai, in view of the proviso clause (a) which states that no such orders, instructions or directions shall be issued so as to require any Central Excise Officer to make particular assessment or to dispose of a particular case in a particular manner. 10.4. Further, it is noticed that the services provided by the appellants DICGC for deposit insurance business are as per the provisions of DICGC Act, 1961; and the appellants are solely providing the service of deposit insurance as a subsidiary of RBI, under the role of 'Deposit Insurer' as envisaged by the Government under 'Deposit Insurance Scheme' which was initially extended to all functioning commercial banks and later....
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....ce Tax dated 14.10.2015, wherein non-levy of service tax on the services provided by an Indian Bank or other entity acting as an agent to the Money Transfer Service Operators (MTSO), in relation to remittance of foreign currency from outside India to India, for the period from 01.07.2012 to 13.10.2014, a specific direction of the Central Government was issued that the said service tax shall not be required to be paid in view of the said practice of non-levy. However, in this case, the CBIC had simply issued the clarification for charging the service tax on the taxable services provided by the appellant forthwith by issue of clarification letter dated 20.09.2011. At this juncture, it could only be persumed that this may be for the reason, that the service provider is a sole and single entity created under the specific enactment i.e., DICGC Act, 1961 and the same is functioning under the jurisdiction of LTU, Mumbai, which is the one single office. Hence, such clarification issued by CBIC to Chief Commissioner, LTU, Mumbai would have been felt sufficient to deal with the issue. We also find that in any case, the demand of service tax for the past period prior to 20.09.2011, by w....