TaxTMI 
TaxTMI 
2024 (5) TMI 622
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....oviding the taxable services of general insurance 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 confirme....
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....is covered by the order of the Tribunal in the 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 h....
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....07. 7.1 In order to address the present case, both on limitation of time and on merits of the 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 req....
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.... demanded and recovered from then under the provision of Section 75 of the Finance Act, 1994; iii) the interest Rs.31,22,454/- (Rs. Thirty One Lakhs Twenty Two Thousand four Hundred and Fifty Four only), for delayed payment 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....
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.... to evade payment of Service tax oy not disclosing the correct amount of premium received/collected thereby resulting in short payment of Service tax. These facts came to knowledge of the Department only upon conduct of EA2000 audit by the officers of the Service Tax 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....
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....udes,- (c) the amount of premium charged by the insurer from the policy holder; Interest on delayed payment of service tax. Section 75. Every person, liable to pay the tax in accordance with the provisions of section 68 or rules made thereunder, who fails to credit the tax or any part thereof to the account of the Central Government within 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 perso....
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....ted service on which service tax was not payable. Further, during the adjudication proceedings, the appellants have also provided details of policy no., risk start date/ policy inception date/ installment effective from date, rate of service tax applied, service tax paid by them etc. for certain period sought by the adjudicating authority. However, none of these aspects have been discussed in the impugned order by 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 in....
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....ies by such person or his agent. There is no such averment to be found in the show cause notice. There is no averment that the duty of excise had been intentionally evaded or that fraud or collusion had been practiced or that the assessee was guilty of wilful misstatement or suppression of fact. In the absence of any such averments in the show-cause notice it is difficult to understand how the Revenue could sustain the notice under the proviso 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 n....
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....gation cast on the assessee to make proper and correct declaration and entries in the production register RG 1. Further finding was that it was not by inadvertence. There could be no other inference if it was not by inadvertence, then deliberate, then it is not in the realm of inaction of the assessee but with the objective of a gain, which in other words would be conscious withholding of the information. Thus unhesitantly we conclude, on the facts of this case, proviso to 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 ....
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....nd 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 until deposit of such amount as may be prescribed, is made in advance in the prescribed manner. (2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer. Explanation. -Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which 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 o....
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.... tax is not applicable to the policies, which were issued prior to the enhancement of the rate. The relevant paragraphs of the said order are extracted and given below: "12. The provisions of Finance Act, which covers the services rendered by the appellants are given under Section 65(49) "general insurance business". In the said Section further definitions of "insurance agent" and "insurance auxiliary service" are also given, which are as under :- "Insurance agent has the meaning assigned to it in clause (10) of section 2 of the Insurance Act, 1938. "Insurance auxiliary service " means any service provided by an actuary, an intermediary or insurance 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,....
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....acts. We find that the Tribunal in the case of Art Leasing Ltd. (supra) was considering an identical situation in respect of the hire-purchase scheme. The Bench held as under :- "The appellant provides services to clients under Hire Purchase Scheme. When the appellant got registered under Section 69 of the Finance Act, 1994 for providing services under the category of Banking and Other Financial Services, the rate of Service tax was 5% w.e.f. 14-52003, the rate was enhanced to 8%. For all Hire Purchase Contracts entered prior to 14-5-2003, the appellant remitted Service tax at the rate of 5%. Revenue proceeded against the appellants on the ground that the appellant is required to remit Service tax @ 8%. The original 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....
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.... the policies covering the risk from 1-7-94 and delayed payment after 1-7-1994 for earlier period would not attract service tax." 18. It can be noticed that the above clarification was given by the Board as early as in the year 1995 and that also in respect of the insurance service. Since an identically worded circular in respect of banking and other financial services is interpreted by the Tribunal in the case of Art Leasing Ltd. (supra), the same reasoning will also apply in this case. Hence, to our mind the enhanced rate of Service Fax is not applicable to the policies, which were issued prior to the enhancement of the rate. We notice that the Tribunal has followed the decision of Art Leasing Ltd. (supra) in LFC Hire Purchase Company Ltd. (supra) and came to the very same conclusion. 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 circ....
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....¤ªà¤¤à¥à¤° The Gazette of India B EXTRAORDINARY à¤à¤¾à¤— II - खगà¥à¤¯ 1 PART II-Section 1 पà¥à¤°à¤¾à¤§à¤¿à¤•à¤¾à¤° का PUBLISHED DY AUTHORITY नई दिलà¥à¤²à¥€. बà¥à¤§à¤µà¤¾à¤°, मई 14, 2003 / वैशाख 24 1925 No. 3 NEW DELHI WEDNESDAY, MAY 14, 2MLV VAISAKHA 24, 1925 इस à¤à¤¾à¤— में नि पृषà¥à¤ संखà¥à¤¯à¤¾ दी जाती है जिससे कि यह अलग संकलन के रूप में रखा जा सके। Separate puging is given to this Part in order that it may be filed as a separate compilation. MINISTRY OF LAW AND JUSTICE (Legislative Department) New Delhi, the 14th May, 2003/Vaisakha 24, 1925 (Saka) The following Act of Parliament received the assent of the President on the Hth May, 2003, ....