TaxTMI 
TaxTMI 
2025 (6) TMI 1360
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....1,14,00,813/- Service Tax: Rs.1,30,85,036/- Refund of CENVAT: Rs.76,63,058/- Credit: Rs.2,74,03,493/- Penalty Rs.13,42,42,430/- No penalty imposed NA Not quantified Amount deposited Rs.6,86,84,605/- (Rs.2,74,03,493/- towards Service Tax Rs.1,14,00,813/- towards Credit demand Rs.2,01,79,222/- towards interest and Rs.97,01,077/- towards penalty) Rs.4,85,452/- (RS. 3,77,917/- towards Service Tax and Rs. 1,07,535/- towards interest) NA NA Impugned Order Order-in-Original No. LTUC/16/2013-(C) dated 21.01.2013 Order in Original No. LTUC/380/2013-C dated 24.10.2013 Order in Appeal No.61/2013 dated 18.11.2013 Order in Original No. LTUC/467/2014-C dated 17.12.2014 SCN SCN No. LTUC/309/2011 (C) dated 20.10.2011 SCN No. LTUC/174/2013-(C) dated 04.06.2013 SCN No. LTUC/195/2011/DC dated 10.06.2011 SCN No. LTUC/56/2014-(C) dated 21.02.2014. 2. The admitted facts are that the assessee is engaged in providing General Insurance Services and in the course of their business the assessee would procure various services from insurance agents. In this regard, for 'Insurance Auxiliary Services' (IAS, for short) procured from the insurance agents, the assesse....
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..../40784/2015 5. Upon receipt of Order-in-Original dt. 21.01.2013 wherein the demand of service tax to the extent of Rs.12,28,41,617/-was confirmed, the assessee appears to have paid an amount of Rs.2,74,03,493/-under protest on 27.02.2013 on which it sought to avail the credit in the month of March 2013. The proceedings initiated against assessee vide SCN dt. 21.02.2014 was dropped by Adjudicating Authority vide OIO No.LTUC/467/2014-C dated 17.12.2014. It is against this order that the Revenue has filed Appeal ST/40784/2015 before Tribunal. 6. The submissions of Shri Raghavan Ramabadran are that in the impugned orders the demands stand confirmed on the commission paid to the insurance agents for the provision of services pertaining to office space, computers, database and other assistance for development of new projects which according to him, are untenable. It was further submitted that as per the definition of "IAS" under Section 65 (55) of the Finance Act, 1994 'IAS' means, "any service provided by an insurance agent in relation to general or life insurance business"; Section 65 (54) of the Finance Act, 1994 defines "Insurance Agent". As per Section 2 (10) of the Insurance&nb....
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....us through the written submissions filed by him during the course of arguments. We find that the written submissions is very much elaborate and hence, we are only reproducing the crux of the contentions herein below :- 10.1 As per Section 65 (105) (d) of the Finance Act, 1994, any service provided or to be provided to a policy holder or any person by an insurer including reinsurer carrying on general insurance business in relation to general insurance business is a taxable service. 10.2 The term, 'general insurance' is defined under Section 65 (49) of the Act as having the meaning assigned to it in clause (g) of section 3 of the General Insurance Business (Nationalisation) Act, 1972.Clause (g) of section 3 of the General Insurance Business (Nationalisation) Act, 1972 provides that 'general insurance business' means fire, marine or miscellaneous insurance business, whether carried on singly or in combination with one or more of them. The terms 'marine insurance business', 'fire insurance business' and 'miscellaneous insurance business' are also defined under the Insurance Act, 1938. As per Section 2 (13B) of the said Act, miscellaneous....
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....ns before learned Adjudicating Authority and after detailed discussion on specific provisions in respect of 'Insurance Agent' as per Section 2(10), Section 42 of Insurance Act, 1938; Section 65(54) and Section 68 of Finance Act; and Rule 2(1)(d)(ii) of the STR; learned Adjudicating Authority has given finding at Para 13.3.5 of OIO and dropped the portion of liability on payments made to Insurance Agents on reverse charge basis. Definition of Insurance Agent: "Insurance agent" means an insurance agent licensed under Sec, 42 who receives agrees to receive payment by way of commission or other remuneration in consideration of his soliciting or procuring insurance business including business relating to the continuance, renewal or revival of policies of insurance. Section 68 of the Act provides the manner and the time within which service tax shall be paid. 10.6 Section 65(54) of the Finance Act, which defines 'Insurance agent' as a person defined in clause (10) of section 2 of the Insurance Act, 1938 (4 of 1938) and Clause (10) of section 2 of the Insurance Act, 1938, defines insurance agent as - Section 2(10) of the Insurance Act. 1938. "Insurance agent"....
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....of Insurance policies, processing of documentation, remitting of insurance premium etc. Hence, the predominant aspect of the activities provided to Insurer is the service provided by person/entities in relation to the general insurance business of Chola MS. 11.2 Further, attention is invited to statutory provisions in respect of Insurance intermediaries / Brokers & Other referral entities. Intermediary or insurance intermediary' is defined under Section 65(56) of the Finance Act and Clause (1) of sub-section (1) of Section 2 of the Insurance Regulatory and Development Authority Act, 1999. As per Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) -"intermediary or insurance intermediary" includes insurance brokers, reinsurance brokers, insurance consultants, surveyors and loss assessors. From the above, it is clear that 'brokers' are included within the definition of 'Intermediary or insurance intermediary' as per Section 2 of the Insurance Regulatory and Development Authority Act, 1999, according to which an intermediary or insurance Intermediary includes insurance brokers, reinsurance brokers, insurance consultants, surveyors and loss ....
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....t were not sure whether the service tax portion was being paid by the said agents. As admitted in the depositions of the agents in earlier paragraphs, the invoices for ORC had not been issued by them and the signature on the said documents were also forged and except for a few, none of them had paid service tax on the said amounts on the plea that they were within the minimum exemption limit. It was noticed during investigations that Chola MS were also indicating service tax element in some of the invoices generated by them and taking credit thereon, without ascertaining whether the said service tax was discharged or not by their agents. 11.5 In order to determine the correct classification of the services rendered by their agents, the relevant provisions of the statute have to be looked at Para 20 of SCN. It would also be clear from the depositions of various dealers of which, the agent receives agrees to receive payment by way of commission or other business relating to the continuance, renewal or revival of policies of insurance, for the insurance agent is that of soliciting or procuring insurance business. Following evidences collected during investigation clearly indica....
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.... 12. AVAILMENT OF CREDIT BASED ON SELF-GENERATED INVOICES 12.1 It appeared from the records that the Taxpayer had availed credit based on self-generated invoices instead of on the invoices issued by the service providers in respect of overriding commission paid to the agents. This credit was sought to be denied in the show cause notice under Rule 14 of the Cenvat Credit Rules, 2004 (hereinafter referred to as 'CCR, 2004). 12.2 Scrutiny of the invoices submitted by Assessee revealed that they were not genuine. Hence, in order to verify the veracity of the said invoices, letters were addressed to the concerned jurisdictional Commissionerates of the service providers enclosing the respective sample invoices. In response, jurisdictional formation confirmed the fact that the said invoices had not been raised by the service providers(illustrative service providers, viz., M/s Advaith Motors Private Limited, authorized dealer of M/a Hyundai Motor India Limited and M/s Ravindu Toyota, authorized dealer of M/s. Toyota Motor India Limited). 12.3 In this regard, statement of Shri Shivakumar Shankar, Senior Vice President, M/s. Chola MS was recorded on 22.9.2010, wherein, he ad....
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....on self-generated invoices Issued at their branch / regional offices. The Taxpayer themselves have not disputed this and have admitted it. In their defence, the Taxpayer have argued that this was only a procedural lapse as tax on the same was discharged by the service providers. 12.7 From a plain reading of Rule 9, it is clear that credit of service tax can only be availed based on invoices, bills or challans issued by the input service provider (Rule 9(1) of the CCR, 2004]. It is also seen that self-generated Invoices are not among the list of eligible documents prescribed under the said Rule. Availability of prescribed documents under Rule 9 of the CCR, 2004, is a necessary prerequisite for availment of credit and cannot be said to be a mere procedural requirement. In this regard, Adjudicating Authority has relied on the judgement of the Principal Bench of the CESTAT, New Delhi, which has vide its Final Order No. 585/2009-SM(BR)(PB), dated 9-6-2009 [2009(06)1/CX0411], in the case of Pearl Drinks Ltd vs CCE, Delhi-I, held that credit would be eligible only on the basis of duty paying documents as prescribed in the Rule 9 of the Rules. The same concept was also reiterated by....
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....d by the assessee that the Service Providers have paid certain amounts as tax after initiation of investigation and therefore, they can avail CENVAT credit is not the correct legal way forward. The constitutionality of the levy or refund of any illegal levy/collection is not under challenge here. The assessee's contention that service has been provided by the agents/entities and received by them and requisite ST as required under Act has been paid by them/ST provider and that these facts are undisputed and no contrary evidence is produced on record is not factually correct as seen from the SCN and the impugned order. The whole dispute is based on a challenge by the department, to the events culminating in the assessee taking credit on the invoices provided by the dealers. 14.2 The wording of Section 73A(2) are clear and unambiguous and should not have left any room for doubt in the mind of the assessee. However, the assessee having sought clarity by making argument that their agents/entities have deposited certain amount as tax, it is further stated that any tax collected, retained or not refunded by the department in accordance with the provisions of a statute must be held ....
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.... refund in terms of Section 11B of the Central Excise Act, 1944 as made applicable to the Finance Act, 1994 by virtue of Section 83 of the Act. It is clear from the Mafatlal judgment that it is for the person who is aggrieved to initiate the process of refund in terms of Section 11B, if he feels that he has paid tax not due and it is not for the department to so suo moto refund the amount or allow CENVAT credit of the same. 14.5 It is submitted by the assessee that the agreement between the assessee and the agents mentions that the payment would be mutually decided. However, it is a hard fact that depositions and documentary evidences unravel the modus of forged invoices by the Assessee and Service Providers agree that there was no mutuality in the decision of raising fake invoices. The predicament in dealing with forged invoices is serious enough to encourage investigators to examination the nature of services in detail. The description in fake/forged invoice is for nomenclature only. Nature of transaction/service has direct nexus with insurance business. Even measure adopted to pay a consideration has direct nexus to insurance business. The exact activity has been discusse....
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....e Agents is revised, the credit at the recipient's end cannot be denied. 16.1 From going through the facts in issue, it is found that this is not a case of the Department seeking to change the classification of a service at the recipient's end. It's a case where as per the proviso to Rule 9(2) of CENVAT Credit Rules, 2004, (CCR 2004) the assessee being the provider of output service, is required to satisfy the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, that the input services on which CENVAT credit is sought to be taken has been received and is covered by the description given in the invoice which has been received and accounted for in the books of the assessee. It is for the recipient of the service / assessee to prove and satisfy the proper office in this regard. The SCN to the assessee is about this deficiency by the assessee to satisfy the proper officer. The principle that the burden of proof regarding the admissibility of CENVAT, while taking input credit, falls on the recipient is further made clear by Rule 9(5) of CCR, 2004. There cannot be a compromise regarding the actual receipt of service according t....
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....by the Agents as described in the invoice, as discussed above, hence the question of eligibility for the mis-declared invoice to qualify as an input service-related document does not arise. To put it briefly in UOI Vs Intercontinental Consultants and Technocrats Private Limited' -2018 (10) GSTL 401 (SC), the Hon'ble Apex Court held that as per Section 67 of the Finance Act, 1994 service tax is with reference to the value of service. As a necessary corollary, it is the value of the services which are actually rendered the value whereof is to be ascertained for the purpose of calculating the service tax payable thereupon. .... Any other amount which is calculated not for providing such taxable service, in this case the 'service' as declared in the invoice, cannot be a part of that valuation as that amount is not calculated for providing such 'taxable service'. The issue is not merely technical as stated by the assessee, but goes to the heart of the law of taxation. 18. The issue is no longer res integra and stands settled by the Adjudicating Authority in the case of M/s. Cholamandalam MS General Insurance Company Limited. 18.1. It is sincerely prayed that the accepted norm t....
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....f the Revenue. Further that while substantive liability falls on the supplier, protective liability lies upon the purchaser (recipient). This legal point was also not an issue for consideration before the Hon'ble High Court in 'Modular Auto Ltd'. Both these subsequent judgments need to be taken on record. 18.7 In 'M/s Cholamandalam' (supra) a Coordinate Bench of this Tribunal examined the issue was that credit was availed by an Insurance Co. on the basis of invoices issued by the dealers of motor vehicles containing description of service which was allegedly never provided by them. 18.8 It is submitted that neither the Section 73A(2) of the Finance Act, 1994 nor the Apex Courts decision in 'Mafatlal Industries' was brought to the notice of the Tribunal. 18.9 Similarly, neither was Rule 9(5) of the CCR, 2004 nor the Apex Courts judgment in 'M/s Ecom Gill Coffee Trading' (supra) brought up for discussion and consideration by the contesting parties before them and if done, it was not discussed. In this context in D.P. Chadha vs Triyugi Narain Mishra, [(2001) 2 SCC 221] was relied upon. 18.10 This position, of the contesting parties in the appeal not bringing up the releva....
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....re the Hon'ble High Court in a Writ Petition under Articles 226 & 227 of the Constitution and the Hon'ble High Court vide Order dated 24.05.2024 in W.P. No. 31725 and 31726 of 2023 and W.M.P Nos.31354 and 31356 of 2024 has set aside the same and passed the order to the following effect: "17. As per the principles enunciated by the Hon'ble Supreme Court in the aforesaid judgment, it is clear that High Court cannot sit in appeal in an earlier order passed by it in the same matter, which has already attained finality and set aside that order. Further, the doctrine of precedents is well explained by observing that a coordinate Bench of the High Court is bound by the order of another coordinate Bench where the order has attained finality and judicial discipline has to be maintained in this regard. Therefore, we are of the view that the dissent expressed by the Member (Technical) of the Tribunal in derogation of the various orders passed by the coordinate benches of the Tribunal on the very same issue, cannot be countenanced. As such, we hold that the very reference made to the third member to adjudicate an issue, which was already set in at naught by the coordinate benches of th....