AI Drafter 
TaxTMI 
TaxTMI 
2023 (5) TMI 339
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....surance and Credit Guarantee Corporation, Mumbai (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....
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....,93,80,153 sanctioned and entire amount appropriated against outstanding arrears of interest 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....
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....premium rate prescribed by RBI as payable by banks to DICGC for deposit insurance is the maximum rate but there being no provision to the contrary, DICGC is free to collect any amount 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 ....
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....he ground that the matter is subjudiced. DICGC has approached the original authority under section 74 of the Finance Act, 1994 in respect of appropriation of refund sanctioned vide Order- in- Original No. LTU/MUM/ST/GLT-5/ANK-18/R/2014 dated 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 ....
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....ion by the department for the period 06.11.2011 to 30.03.2012 determining the interest amount for 145 days as Rs.19,38,27,885/- in their letter dated 25.08.2015. Similarly, the assessee claim that the calculation of interest for the period 07.06.2012 to 23.08.2012 for 79 days as should be 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 ....
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....-in- Appeal is legal and proper? (b) Whether the Commissioner of Central Excise (Appeals), LTU, Mumbai, has erred in holding that the service tax liability required to be discharged by DICGC on the premium cannot be collected over and above the premium amount? (c) Whether by an order passed under Section 86 of Chapter V of 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 Commis....
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.... learned Authorised Representative for Revenue while reiterating the points as decided in the impugned order to the extent they were acceptable to the department, also explained the grounds on which the department had preferred appeal. The written submission made by the learned AR consisted of the following points, in brief: (i) the Department is praying for computation of tax 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 m....
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....l Area Banks, Regional Rural Banks and all eligible co-operative banks as defined under the DICGC Act,1961 are covered by the Deposit Insurance Scheme. 2.2. The legal framework for DICGC is provided by the DICGC Act, 1961 and the DICGC General Regulations,1961. Pursuant to opting for Large Taxpayer Unit (LTU) membership for tax purposes by DICGC, in the year 2008, the question of coverage of deposit insurance 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 a....
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....view of the clarification given by the CBEC vide letter dated 24/02/2009 that the said service is not taxable which was withdrawn vide letter dated 20/09/2011. (3) The appellant is not eligible for the benefit of tax exemption under notification 22/2006-ST dated 31/05/2006, as amended. (4) We set aside the penalty imposed on the appellant invoking the powers conferred under Section 80 of the Finance Act, 1994." 6.2. From the above, we find that the matter regarding 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 appella....
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....s, the total compensation received should be treated as inclusive of service tax due to be paid by the ultimate customer of the services unless service tax is also paid by the customer separately. So considered, when no tax is collected separately, the gross amount has to be adopted to quantify the tax liability treating it as value of taxable service plus service tax payable. We find that this principle has been legislated in the following terms with effect from 18.04.2006 in Section 67 (2) of the Finance 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 t....
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....ice and the assessable value should be determined after deducting the element of excise duty. It is this part of the decision of the Tribunal which is sought to be challenged by the Revenue in this appeal. The respondent had sold the scrap and according to it the purchaser was not liable to pay any amount in addition thereto and it is for this reason the Tribunal regarded this transaction as being one of cum-duty price. Section 4 of the Central Excises and Salt Act, 1944 provides for valuation of excisable goods for purposes of charging of 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 deduc....
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....-imburse him in respect of the excise duty already paid by him on the manufacture of the goods. But even so, it would be part of the 'sale price' because it forms a component of the consideration payable by the purchaser to the dealer. It is only as part of the consideration for the sale of the goods that the amount representing excise duty would be payable by the purchase:. There is no other manner of liability, statutory or otherwise, under which the purchaser would be liable to pay the amount of excise duty to the dealer. And, on this reasoning, it would make no difference whether the 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. ....
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....sioner of Central Excise (Appeals), LTU, Mumbai that "premium amount collected has to be necessarily considered as inclusive of the service tax element". Whether interest payable by the appellants for the delay in payment of service tax on the due date, require determination in terms of service tax legislation; and whether such amount of interest is required to be redetermined 8.1. We find that the legal provisions on payment of service tax, due date for payment of service tax has been provided in the Finance Act, 1994 and the Rules made there under, as follows: Extract of Sections 68, 75 of the Finance Act, 1994: 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 th....
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....rom one or more premises is fifty lakh rupees or less in the previous financial year, or is an individual or proprietary firm or partnership firm or Hindu Undivided Family, the service tax shall be paid to the credit of the Central Government by the 6th day of the month if the duty is deposited electronically through internet banking, or, in any other case, the 5th day of the month, as the case may be, immediately following the quarter in which the service is deemed to be provided as per the rules framed in this regard : Provided further that the service tax on the service deemed to be provided in the month of March, or the quarter ending in March, as the case may be, shall be paid to the credit of the Central Government 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....
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....provided by him either wholly or partially for any reason, or where the amount of invoice is renegotiated due to deficient provision of service, or any terms contained in a contract, the assessee may take the credit of such excess service tax paid by him, if the assessee.- (a) has refunded the payment or part thereof, so received for the service provided to the person from whom it was received; or (b) has issued a credit note for the value of the service not so provided to the person to whom such an invoice had been issued. (4)Where an assessee is, for any reason, unable to correctly estimate, on the date of deposit, the actual amount payable for any particular month or quarter, as the case may be, he may make a request in writing to the Assistant Commissioner of Central 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....
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.... the invoice for the service provided or agreed to be provided is issued: Provided that where the invoice is not issued within the time period specified in rule 4A of the Service Tax Rules, 1994, the point of taxation shall be the date of completion of provision of the service. (b) in a case, where the person providing the service, receives a payment before the time specified in clause (a), the time, when he receives such payment, to the extent of such payment. Provided that for the purposes of clauses (a) and (b),- (i) in case of continuous supply of service where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the receiver of service to make any payment to service provider, the date 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, a....
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.... in the impugned order. In specific terms, the appellants have stated that error has been caused in the show cause notice dated 31.01.2013 and 25.06.2013 which demanded interest on delayed payment of duty. For the demand of interest during the disputed period October, 2011 to March, 2012, it is claimed by the appellants DICGC that the show cause notice had wrongly captured the due date for payment of service tax as "06.11.2011", in respect of entire taxable gross premium received in the month of November, 2011 and thus the actual due date for payment of service tax as per Rule 6 of Service Tax Rules, 1994, it will be "06.12.2011". Hence the calculation of interest for the above delayed payment during the disputed period shall be for 115 days and not for 145 as calculated by the department, and as illustrated by the appellants DICGC, in detail as below: Table - 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 service....
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....170 2 Service Tax payable including Cess 345,23,49,488 345,23,49,488 3 Service Tax actually paid by appellants 343,00,00,000 343,00,00,000 4 Excess payment made 2,23,49,488 2,23,49,488 5 Interest calculation @18% for 110 days (06.05.2012 to 23.08.2012) May - 2012- 26days June, 2012-- 30 days July, 2012 -- 31 days August, 2012 -- 23 days Total --110 days 12,12,383 - 6 Interest calculation @18% for 79 days (06.06.2012 to 23.08.2012) June, 2012 -- 25 days July, 2012 -- 31 days August, 2012 -- 23 days Total --79 days - 8,70,712 8.4. On the above issue, we find that the facts of the case have been shown with respect to the ST-3 returns filed by the appellants DICGC and hence there exist reasonable ground for accepting the arguments advanced by the appellants DICGC. However, we donot have any other records such as invoice, receipts, online transactions summary, statement o....
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....n 08.07.2014. In the first two orders dated 30.01.2014, the original authority, while sanctioning the refund of service tax paid, had adjusted the same against the interest on service tax on the ground that these are outstanding arrears for an amount of Rs.18,93,80,153/- and Rs.26,50,512/-. Further vide order dated 01.08.2014 the original authority had also appropriated and adjusted an amount of Rs.19,29,66,692/- against outstanding arrears of interest. We find that the in another Order-in-Original No.01-02/COMMR (WLH)/LTU/M/CX/2014 decided by the Commissioner of Central Excise& Service Tax, LTU, Mumbai on 11.04.2014, wherein the interest for the period 06.11.2011 to 30.03.2012 for an amount of Rs.19,17,54,309/- and for the period 06.05.2012 to 23.08.2012 for an amount of Rs.12,12,383/- was confirmed and ordered to be recovered; precisely against this order the appellants DICGC had filed an appeal before this Tribunal along with stay application, which was then decided on 11.03.2015. 9.2. Accordingly, we find that the conclusion arrived by the first appellate authority in his impugned order that during the pendency of stay applications before this Tribunal, no coercive action ca....
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.... 87 of the Finance Act, 1994, the first appellate authority cannot be found fault with the following findings as determined by him in his order at para 11(a) to 11(d): (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 dated 01.08.2014 to the extent it appropriates an amount of Rs.19,29,66,692/- is set aside. The amount of refund sanctioned to DICGC in this Order in Original shall be paid to them forthwith. (d) I allow the appeal of DICGC filed against Order- in- Origina....
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....ings by invocation of extended period could not be sustained in law and this Tribunal vide its earlier order dated 11.03.2015 had set aside the same. 10.2. In order to answer the logical question and the eagerness of the department in the appeal praying for re-computation of the service tax afresh, we go back to the clarification issued by the department in its letter F. No. 137/135/2008-CX-4 dated 20.09.2011 on the applicability of service tax on the activities carried out by the appellants DICGC. The said letter of CBIC clearly provides in para 8 & 9 as follows: "8. In view of the above discussion it is clarified that the insurance activity of DICGC falls within the ambit of Section 65(105)(d) of the Finance Act, (FA,1994) and is chargeable to service tax. 9. This clarification may be given wide publicity." 10.3. We find that this letter was issued by the Director (Service Tax) of CBIC, addressed to the Chief Commissioner, Large Taxpayer Unit, Mumbai. Though this letter takes into account the background of the issue, earlier clarifications offered from the Ministry of Finance, review and modifications for coming to the conclusion that was....
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....tions as may be specified or by a special order under section 93. We further notice that Central Government is vested with the powers for issue of notification under Section 11C of Central Excise Act, 1944 as made applicable to service tax as per section 86 of the Finance Act, 1994, where if it is satisfied that a practice was, or is, generally prevalent regarding levy of service tax, including non-levy thereof, on any taxable services; and that such taxable services were, or are, liable to service tax, in cases where according to the said practice the service tax was not, or is not being levied, then the Central Government may direct that the whole of the service tax shall not be required to be paid, in respect of such taxable services. Thus we find that the above legal provisions clearly provide for handling the non levy or for not charging service tax for the past period prior to 20.09.2011, in a specific manner as discussed above. We also find that CBIC had issued such notifications in above described scenario. An example of such notification issued by Government is the Notification No. 19/2015 Service Tax dated 14.10.2015, wherein non-levy of service tax on the services provid....
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....nment, as per the provisions Sections 68 and 75 of the Finance Act, 1994 read with Rule 6 of Service Tax Rules, 1994, and Rule 3 of Point of Taxation Rules, 2011. Needless to state that the first appellate authority should take into account all the details submitted or to be submitted by the appellants DICGC and any other record necessary for the purpose of such re-determination; and also give reasonable opportunity for personal hearing of the appellants DICGC. 11.3. We also uphold the order of the first appellate authority i.e., the Commissioner of Central Excise (Appeals), C. Excise and Service Tax, LTU, Mumbai-I on the basis of the findings that the provisions of Section 11 of the Central Excise Act, 1944 providing for recovery of sum due to the Government has not been made specifically applicable to service tax matters under Section 83 of the Finance Act, 1994 and the fact that the show cause notice proceedings were not concluded and thus there were no confirmed demands as on the date of passing the orders-in-original by the concerned Assistant/Deputy Commissioner, to consider these amount of refunds sanctioned to appellants DICGC to be adjusted as arrears for re....