TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 622
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....urance services, insurance auxiliary services and management consultancy services. During the course of verification of the records maintained by the appellants and ST-3 Returns, the Audit officers of the Department had found certain difference between the service tax payable and the service tax paid in the ST-3 Returns for the period 2003-04 to 2006-07 leading to a conclusion of short payment of service tax by the appellants. The department had interpreted that as per Section 67 ibid the value of taxable services is required to be computed for the consideration received which is the gross amount charged for the services provided and thus there was certain short payment of service tax. On completion of audit verification, the Department had initiated show cause proceedings by issue of show cause notice cum demand dated 20.10.2008 proposing for demand of service tax short paid in the ST-3 Returns filed during 2003-04 to 2006-07 along with interest, recovery of interest on delayed payment, imposition of penalties on the appellants. In adjudication of the above SCN dated 20.10.2008, the Commissioner, CGST (Audit-II), Mumbai had confirmed the adjudged demands under Section 73(1) ....
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....case of Bajaj Allianz General Insurance Company Vs CCE - 2009 (13) S.T.R. 259 (Tri. Mumbai) wherein it has been held that the enhancement in the rate of service tax is not applicable to the policies, which were issued prior to the enhancement of the rate. He further stated that the said order has been upheld by the Hon'ble Supreme Court, and thus the ratio of the said case is squarely applicable to their case and the impugned order is liable to be set aside on the above basis. 3.3 Furthermore, learned Advocate also stated that in the show cause notice there was not even a whisper about the invocation of the extended period of limitation and there is no mention of any grounds for such a demand under Section 73(1) ibid. Thus, he claimed that the SCN cannot be sustained as the grounds for revocation of extended period is not even mentioned and established in the impugned order, in view of the judgement pronounced by the Hon'ble Supreme Court in the case of Uniworth Textiles Ltd. Vs. Commissioner of Central Excise, Raipur - 2013 (288) ELT 161 (SC). He also stated that in a number of judgements the Hon'ble Bombay High Court had held that gross delay in adjudication of SCN l....
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....e case, we would like to refer the show-cause notice and impugned order in details. In the Show Cause Notice dated 20.10.2008, the short payment of service tax along with interest was demanded and imposition of penalties were also proposed on the following basis. The specific paragraphs dealing with these in the SCN is extracted and given below: "2. During the course of verification of ST-3 Returns, for the period from 03-04 to 06-07, it is noticed by the audit Officers of the Service Tax Commissionerate, Mumbai that there is a difference between service tax payable and Service Tax paid in the ST-3 returns filed for the periods 2003-04 and 2006-07, leading to short payment of service tax of Rs.1,09,03,197/- for 2003-04, and Rs.1,71,37,888/- for 2006-07, and thus they have made total short payment of Service Tax of Rs.2,80,41,085/- as detailed in Annexure A to the Show Cause Notice. Further the assessee could not give any justification/or clarification or statistical data about the said short payments. As per section 67 of the Finance Act, 1994, the value of taxable service is required to be computed where the provision of Service is for a consideration received wholly in money, t....
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....ment of Service Tax of Rs.38,25,99,991/-should not be demanded and recovered from them under the provision of Section 75 of the Finance Act, 1994; iv) a penalty should not be imposed on them under Section 76 of the Finance Act, 1994. v) a penalty should not be imposed upon them under the provisions of Section 77 of Chapter V of the Finance Act, 1994 (32 of 1994) for contravention of the provisions under Section 70 for non-filing of correct returns in time; vi) a penalty should not be imposed upon them under the provisions of Section 78 of Chapter V of the Finance Act, 1994 (32 of 1994) for suppressing the value of services in the ST-3 Returns during the period 2003-04 and 2006-07 for contravention of the provisions under Section 68, for not declaring the correct value of the taxable services." 7.2 In the impugned order dated 31.08.2020 at paragraph 9, the learned Commissioner had recorded that the only issue to be decided by him is on the short payment of service tax as demanded in the Show Cause Notice, since on the interest for delayed payment of service tax, the appellants had not disputed the delay in payment and the liability of interest thereon. He had recorded the....
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....x Commissionerate. There has, thus, been suppression of facts. The ratio of the decision of the Supreme Court in Madras Petro-chem Limited versus Collector of Central Excise. Madras. 1999 (108) ELT 611, in the circumstances, would apply to justify the invocation of the extended period of limitation in the facts and circumstances of this Case. 20. I hold that the Noticee has violated/contravened provisions of Section 67 read with Section 68 of the Finance Act, 1994 in as much as they (i) failed to determine correct value/consideration of the taxable services; (i) failed to pay appropriate Service Tax on the gross consideration received by them; (iii) failed to pay Service Tax on due dates as prescribed under Rule 6(1) of the Service Tax Rules, 1994 and (iv) failed to inform the entire activity of the Noticee to the department. Thus, they deliberately mis-stated and withheld the full facts with intent to evade the payment of Service Tax due thereon." 8.1 In order to address the above issue, we would like to refer the relevant legal provisions contained in Section 73 of the Finance Act, 1994 as it existed during the disputed period and the respective Finance Acts under which diff....
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....hin the period prescribed, shall pay simple interest at such rate not below ten per cent and not exceeding thirty-six per cent per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, for the period by which such crediting of the tax or any part thereof is delayed. Penalty for suppressing, etc., of value of taxable services.- Section 78 (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of- (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person, liable to pay such service tax or erroneous refund, as determined under sub-section (2) of section 73, shall also be liable to pay a penalty, in addition to such service tax and interest thereon, if any, payable by him, which shall be equal to the amount of service tax so not levied or paid or short-levied or short-paid or erroneously refunded:...." 8.2 It is not under dispute that the taxable services fo....
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....y the learned Commissioner. Further, the appellants in this case is registered with the Department, paying service tax and filing periodically ST-3 returns and other declarations. It is also a fact on record that all these records are available to the Department and more so to the Audit team of the department who verified the records. In such a situation and that there being no positive act on the part of the appellants to suppress any fact or information from the department, and that there being no evidence for such allegation in the SCN, we find that it is not proper and legal to invoke extended period. Thus, we are of the considered view that the SCN dated 20.10.2008 issued to the appellants is time barred. 9.2 In this regard, we find that the issue with respect to invocation of extended period in respect of fraud, collusion, willful mis-statement or suppression of facts under tax demands is no more open to dispute, as the Hon'ble Supreme Court in the case of Uniworth Textiles (supra) had held that the onus is on the Revenue to prove the presence of such specific grounds. The relevant paragraphs of the above judgements is extracted below: "24. Further, we are not ....
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....o to Section 11-A(1) of the Act.' It was held that the show cause notice must put the assessee to notice which of the various omissions or commissions stated in the proviso is committed to extend the period from six months to five years. That unless the assessee is put to notice the assessee would have no opportunity to meet the case of the Department. It was held : ...There is considerable force in this contention. If the department proposes to invoke the proviso to Section 11-A(1), the show-cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and if the Excise Department places reliance on the proviso it must be specifically stated in the show-cause notice which is the allegation against the assessee falling within the four corners of the said proviso...."  ....
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....o Section 11 would be applicable, hence, show cause notice is held to be within time." Thus, the ratio of the above case is not applicable to the present case before us, as the facts of the present case are entirely different. 10.1 We find that the applicable rate of service tax as per the Finance Acts in force at the relevant point of time, during the period of dispute is as below: Date of effecting change in Service Tax Finance Act & Rate of applicable S. Tax Education Cess on Service Tax Total rate of tax With effect from 01.07.1994 Finance Act, 1994 5% Nil 5% With effect from 14.05.2003 Finance Act, 2003 8% Nil 8% With effect from 10.09.2004 Finance Act (No. 2), 2004 10% 2% 10.2% With effect from 18.04.2006 Finance Act, 2006 12% 2% 12.24% The increase in the rate of service tax have been brought into effect when the respective Finance Bills introduced in the Parliament were accorded with the Presidential Assent. The extract of the relevant provisions of the Finance Acts viz., Finance Act, 2003; Finance (No.2) Bill, 2004 and Finance Act, 2006 a....
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....h the money order is booked or the cheque is posted, as the case may be. (3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent. (4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or dispatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty-four hours of the collection excluding bank and postal holidays. (5) The Central Government may, by rules, relax the requirements of sub-section (1) in respect of particular categories in insurance policies." From the above, it transpires that in terms of the Insurance Act, 1938, the effective date of contract is the date on which the premium or bank guarantee is received, as from such date the insurer is allowed to assume the risk for which....
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....ance intermediary or an insurance agent in relation to general insurance business or life insurance business and includes risk assessment, claim settlement, survey and loss assessment." 13. The taxable services, i.e., considered for discharge of service tax liability are enumerated in the sub-section 65(105). The taxable services in this case of general insurance business is enumerated at 65(105)(d), which is "to a policy holder by an insurer carrying on general insurance business in relation to the agent, insurance business". 14. It is undisputed that the appellant is carrying out the business of general insurance. It is also undisputed that the appellant collected the premium in advance as provided under the provisions of Section 64VB of the Insurance Act, 1938 on insurance/assurance on the policy issued. The said Section 64VB of the Insurance Act, 1938 is as under :- "No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and unti....
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....ginal authority confirmed a demand of Rs. 44,054/- under Section 73 of the Finance Act. The Commissioner (Appeals) upheld the order of the original authority. The appellants are aggrieved over the impugned order. Shri T.M. Sreedharan, the learned Advocate, appeared for the appellants and Shri K. Sambi Reddy, the learned JDR, for the Revenue. Heard both sides. The Banking and Financial Services came under the Service tax net w.e.f. 16-7-2001. At that time, CBEC issued clarification to the effect that in respect of Hire Purchase Contracts entered prior to 16-7-2001 and instalments of which werereceived after 16-7-2001,there is no Service tax liability. In our view, the same logic is applicable to the present case also. When the Hire Purchase contract is entered, the taxable event occurs. We agree with the appellants that the instalment payments are only obligations of the hirer. The finding of the Commissioner (Appeals) that the appellant continues to provide service during the payment of instalments is not correct. Therefore, the rate of Service tax will be the rate prevailing on the date on which the contract is entered into. Consequently, the demand of differential amount ap....
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.... 19. Ld. Special Counsel for the revenue made valiant effort to bring to our notice that the amount, which is received as premium by the appellant was an advance payment and, hence, this has to be appropriated as per the clarification by the Board vide its Circular dated 5-11-2003. We are not impressed by the said proposition as the two decisions of the Tribunal in an identical circumstances on enhanced service tax liability held that enhanced rate is not applicable for the amounts subsequently collected as EMI. In this case the appellant is on a more stronger footing, as the premium is received in advance and no further amount is collected, as in the cases of Art Leasing Ltd. (supra) and LFC Hire Purchase Company Ltd. (supra). 20. In view of the above reasonings and respectfully following the ratio in the cases of Art Leasing Ltd., and LFC Hire Purchase Company Ltd., we hold that the impugned order is not sustainable and is liable to be set-aside, and we do so. Appeal is allowed." 11.2 Furthermore, we also find that the issue of service tax liability in respect of general insurance premium as held by the Tribunal in the case of Bajaj Allianz General Insurance Co. Ltd. (supra)....