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TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 270
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....ppellate Tribunal, Chennai, (in short, "the CESTAT") in Interim Order Nos.40007 - 40008/2023 in Appeal Nos. ST/40810/2017 and ST/40198/2020, to the extent it is prejudicial to them. For ease of reference, the operative portion of the order impugned herein, is reproduced below: DIFFERENCE OF OPINION In view of the difference of opinion between the Members, the following questions are framed for resolving the difference:- Whether the appeals is to be allowed by setting aside the impugned orders as held by Member (Judicial)? (OR) Whether the appeals is to be dismissed by upholding the impugned orders as held by Member (Technical)? BRIEF FACTS: 2.(i) The petitioner is engaged in the business of providing general insurance services relating to Motor Insurance, Health Insurance, Property Insurance, Engineering Insurance, liability insurance and other miscellaneous insurance and it was registered with the Service Tax Department under Registration No.AABCR7106GST001. The petitioner is carrying on such business from 2001 and they also registered themselves with Insurance Regulatory Development Authority of India (IRDAI) to conduct business of general insurance. (ii) Accordin....
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....s". But, in reality, the dealers did not provide any such service to the petitioner, much less the service described in the invoices. The invoices have been raised in such a manner only to pass over the insurance commission to the dealers under the garb of providing services. The dealers pay service tax on the amount collected from the petitioner as per the invoices, based on which the petitioner has availed CENVAT credit for the service tax paid by them. According to the Department, the availment of such credit is irregular inasmuch as no service, as described in the invoices, has been provided by the dealer to the petitioner. The investigation also unfolded that all the computer generated invoices are not in conformity to Rule 4A of the Service Tax Rules, 1994 inasmuch as the invoices did not bear the signature of the dealer evidencing as to who has issued the invoice. The investigation officials, therefore, concluded that the credit availed on invoices is to be declared as ineligible. (iv) In this context, show cause notice for the period from 2010-2011 to 2014-2015 was issued and ultimately, Order-in-Original dated 23.12.2016 was passed by the Commissioner of Large Taxpayer Un....
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..... Honda Motors India Pvt Ltd., to the petitioner is untenable. According to the learned counsel, the CENVAT credit cannot be denied to the petitioner merely because there was no signature in the invoices. When the tax is paid by the petitioner and it is not the case of the Department that the invoices are fake or bogus, the denial of CENVAT credit is legally unsustainable. In this context, reliance was placed on the decision of the Tribunal at Chandigarh in Automax vs. CCE Delhi reported in 2018 (363) ELT 1121 (Tri:-Chand) to contend that when there is no dispute qua duty paid, nature of the goods transacted and the actual receipt of the goods in the recipient's factory, then, the credit cannot be denied on the mere ground that the description of goods in the invoice is incorrect. The learned counsel further submitted that in that decision, the Tribunal at Chandigarh concluded that when no investigation was initiated at the hands of the transporter or supplier, then the denial of CENVAT credit at the recipient's end is unlawful. (iii) The learned counsel for the petitioner also contended that the denial of CENVAT credit was on the ground that the invoices issued by TVS Sun....
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....administrative or servicing charges' is permitted to be made to the agent or broker in respect of the business of which he is paid agency commission or brokerage.' Contrary to the guidelines issued in the Circular, the petitioner maintains business connection with automobile dealers for procuring insurance policy from the vehicle buyers. The petitioner is not authorised to outsource such insurance services. As per Section 40 of the Insurance Act, only licensed brokers are permitted to do insurance business and entitled to receive commission. For the purpose of receiving commission, the dealers of the petitioner have raised invoices describing the services as 'data processing and policy servicing activities', but, in fact, they render no such service. The taxable value and the service tax is calculated as a percentage of own damage (OD) premium and intimated by the petitioner to the dealers through e-mail. These facts have been brought out during the investigation conducted by the department. Before passing the orders, which were impugned before the CESTAT, it was contended that the statement of Sri Venkatachalam Sekar, authorised representative of the petitioner was....
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....cted charges for the same along with service tax, which had gone unnoticed. The department has opted to retain the tax collected, but sought to deny the credit to the petitioner without questioning or disturbing the assessment of the dealers. The learned Senior counsel for the petitioner invited the attention of this Court to the decision in Modular Auto Ltd., vs. CCE, Chennai, reported in 2018 (8) TMI 1691 Madras, wherein it was held that denial of credit at the hands of the petitioner is not justified. However, the Member (Technical) of the Tribunal held against the petitioner by holding that the car manufacturers only facilitate insurance companies to have business through their dealer and apart from this, there is no service provided by them. It was also concluded that in furtherance of the sale of policy, the dealers receive the insurance premium from the customers, take out a print out of the insurance policy to complete the sale and hand it over to the customers and except the same, no other service activity is provided to the petitioner. This conclusion of the Member (Technical) of the Tribunal, according to the learned Senior Counsel for the petitioner, is perverse and arb....
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....it was also followed by the Coordinate Benches of the Tribunal. Even though the aforesaid decisions have been placed before the Tribunal, the impugned order was passed by the Tribunal. (vi) The learned Senior counsel for the petitioner invited the attention of this court to the prejudicial portion of the order of the Tribunal in para No.45 and submitted that the attempts made by the Tribunal to distinguish the case laws submitted by the petitioner are improper. When identical decisions rendered by the Coordinate Benches of the Tribunal have been placed, in order to maintain judicial propriety, the Tribunal ought to have followed them or in the event of the same not being followed, the only option is to place the matter before a larger bench for deciding the matter. In this context, the learned Senior counsel referred to the decisions in Jindal Dye Intermediaries Limited vs. Collector of Customs, Mumbai (2006) (197) E.L.T. 471 (SC) and Jayswals Neco Ltd., vs. CCE, Nagpur (2006( 195) E.L.T. 142 (S.C) wherein it was held that if a Bench does not agree with the view taken by a Coordinate Bench, then, it should refer the matter to a larger bench and refrain from taking a contrary view.....
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.... the assessee has to await the order to be passed by the third member and without knowing the majority verdict of the Tribunal, the writ petitions filed by the petitioner are not maintainable. Accordingly, the learned Senior Panel Counsel submitted that the matter has been referred to a third member for opinion. Even before the third member renders his opinion, the petitioner rushed to this Court with these writ petitions. Therefore, the learned Senior Panel Counsel prayed for dismissal of the writ petitions. 9. We have heard the learned Senior counsel for the petitioner and the learned Senior Panel Counsel for the respondents and also perused the record. 10. The present writ petitions are filed mainly on the ground that the conclusion reached by the Member (Technical) to the effect that no service has been provided to the petitioner by the dealers or manufacturers and consequently, the petitioner, as a provider of output service, cannot avail CENVAT input credit on the invoices generated by the dealers, is legally not sustainable. According to the learned Senior Counsel for the petitioner, the very same issue has been considered and decided by the jurisdictional High Court as we....
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....t therein was allowed. 13. The learned senior counsel for the petitioner also relied on the order passed by the CESTAT, Hyderabad in the case of Conneqt Business solutions Limited vs. CCE reported in 2023 (7) TMI 204. In that case, a Tripartite agreement was entered into for the dealer to provide space, infrastructure, manpower etc., to enable the assessee to seek insurance business for their company. The issue involved in that case was whether for such services provided by the dealers, the Assessee would be eligible for Cenvat Credit. The CESTAT Tribunal, Hyderabad, following the decisions rendered in Modular Auto as well as Cholamandalam-I as well as ICICI Lombard case mentioned supra, held that when the service tax paid at the end of the service provider is not questioned and when there is no doubt that the service tax in question has been paid, the CENVAT Credit taken by the recipient cannot be denied. Further, unless and until the assessment made at the dealer's end is revised or altered, the CENVAT credit availed on the basis of invoices by the recipient's unit cannot be denied or whittled down. 14. Referring to the decisions of the Honourable Supreme Court in Union....
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....hich was also followed by the other Coordinate Benches in various other cases, there is no reason for the Member (Technical) to independently assess the merits of the case and to reach a different conclusion. Therefore, we hold that the very reference made by the Tribunal to determine as to whether the conclusion reached by the Member (Judicial) is right or the one made by the Member (Judicial) itself is unnecessary. The issue before the Tribunal has already been examined and adjudicated by the coordinate benches and it binds the Tribunal in all respects. While so, the Tribunal cannot go beyond the settled issue and to re-adjudicate the same by referring the dispute to a third member. Judicial discipline requires that the orders of the coordinate bench or the jurisdictional High Court have to be followed without in any manner attempting to factually re-examine or re-adjudicating the same issue. 16. At this juncture, it would be appropriate to refer to the decision of Hon'ble Supreme Court in the case of Official Liquidator v. Dayanand and others, reported in (2009) 1 SCC (L&S) 943, in which, the aspect of judicial discipline has been discussed in detail. Paragraphs 75 to 92 of....
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....retary, State of Karnataka vs. Uma Devi (supra) by observing that the ratio of that judgment cannot be applied to a case where regularization has been sought for in pursuance of Article 14 of the Constitution. The two-Judges Bench then referred to State of Orissa vs. Sudhanshu Sekhar Misra [AIR 1968 SC 647], Ambica Quarry Works vs. State of Gujarat [1987 (1) SCC 213], Bhavnagar University vs. Palitana Sugar Mill Pvt. Ltd. [2003 (2) SCC 111], Bharat Petroleum Corpn. Ltd. vs. N.R.Vairamani [2004 (8) SCC 579] and observed: "16. We are constrained to refer to the above decisions and principles contained therein because we find that often Umadevi (3) case is being applied by courts mechanically as if it were a Euclid's formula without seeing the facts of a particular case. As observed by this Court in Bhavnagar University and Bharat Petroleum Corpn. Ltd. a little difference in facts or even one additional fact may make a lot of difference in the precedential value of a decision. Hence, in our opinion, Umadevi (3) case cannot be applied mechanically without seeing the facts of a particular case, as a little difference in facts can make Umadevi (3) case inapplicable to the facts of....
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....er Benches of this Court have either ignored or bypassed the ratio of the judgments of the larger Benches including the Constitution Benches. These cases are illustrative of non-adherence to the rule of judicial discipline which is sine qua non for sustaining the system. In Mahadeolal Kanodia vs. Administrator General of W.B. [1960 (3) SCR 578], this Court observed: "19. If one thing is more necessary in law than any other thing, it is the quality of certainty. That quality would totally disappear if Judges of coordinate jurisdiction in a High Court start overruling one another's decisions. If one Division Bench of a High Court is unable to distinguish a previous decision of another Division Bench, and holding the view that the earlier decision is wrong, itself gives effect to that view the result would be utter confusion. The position would be equally bad where a Judge sitting singly in the High Court is of opinion that the previous decision of another Single Judge on a question of law is wrong and gives effect to that view instead of referring the matter to a larger Bench. In such a case lawyers would not know how to advise their clients and all courts subordinate to the H....
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.... clients. Sub-ordinate courts would find themselves in an embarrassing position to choose between the conflicting opinion. The general public would be in dilemma to obey or not to obey such law and it ultimately falls into disrepute." 82. In Dr.Vijay Laxmi Sadho vs. Jagdish [2001 (2) SCC 247], this Court considered whether the learned Single Judge of Madhya Pradesh High Court could ignore the judgment of a coordinate Bench on the same issue and held: "33. As the learned Single Judge was not in agreement with the view expressed in Devilal case it would have been proper, to maintain judicial discipline, to refer the matter to a larger Bench rather than to take a different view. We note it with regret and distress that the said course was not followed. It is well-settled that if a Bench of coordinate jurisdiction disagrees with another Bench of coordinate jurisdiction whether on the basis of "different arguments" or otherwise, on a question of law, it is appropriate that the matter be referred to a larger Bench for resolution of the issue rather than to leave two conflicting judgments to operate, creating confusion. It is not proper to sacrifice certainty of law. Judicial decoru....
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....e referred the case to a Bench of five learned Judges. 6.In the present case the Bench of two learned Judges has, in terms, doubted the correctness of a decision of a Bench of three learned Judges. They have, therefore, referred the matter directly to a Bench of five Judges. In our view, judicial discipline and propriety demands that a Bench of two learned Judges should follow a decision of a Bench of three learned Judges. But if a Bench of two learned Judges concludes that an earlier judgment of three learned Judges is so very incorrect that in no circumstances can it be followed, the proper course for it to adopt is to refer the matter before it to a Bench of three learned Judges setting out, as has been done here, the reasons why it could not agree with the earlier judgment. If, then, the Bench of three learned Judges also comes to the conclusion that the earlier judgment of a Bench of three learned Judges is incorrect, reference to a Bench of five learned Judges is justified. [Emphasis supplied] 84. In State of Bihar vs. Kalika Kuer and others [2003 (5) SCC 448], the Court elaborately considered the principle of per incuriam and held that the earlier judgment by a larg....
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....ipline and respect for the Brother Judges." 88. In U.P. Gram Panchayat Adhikari Sangh vs. Daya Ram Saroj [2007 (2) SCC 138], the Court noted that by ignoring the earlier decision of a coordinate Bench, a Division Bench of the High Court directed that part-time tube-well operators should be treated as permanent employees with same service conditions as far as possible and observed : "26. Judicial discipline is self-discipline. It is an inbuilt mechanism in the system itself. Judicial discipline demands that when the decision of a coordinate Bench of the same High Court is brought to the notice of the Bench, it is to be respected and is binding, subject of course, to the right to take a different view or to doubt the correctness of the decision and the permissible course then open is to refer the question or the case to a larger Bench. This is the minimum discipline and decorum to be maintained by judicial fraternity." 89. It is interesting to note that in Coir Board, Ernakulam vs. Indira Devi P.S. [1998 (3) SCC 259], a two- Judges Bench doubted the correctness of the seven-Judges Bench judgment in Bangalore Water Supply & Sewerage Board vs. A.Rajappa [1978 (2) SCC 213] and ....