Custom, Excise & Service Tax Tribunal
M/S Bharat Re-Insurance Brokers Pvt. ... vs Commissioner Of Central Excise And ... on 26 August, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL BANGALORE Final Order No. 21498 / 2014 Application(s) Involved: ST/Stay/26802/2013 in ST/26469/2013-DB Appeal(s) Involved: ST/26469/2013-DB [Arising out of the Order-in-Appeal No. 09/2013 dated 10/01/2013 passed by Commissioner of Central Excise and Service Tax (Appeals-II), HYDERABAD] M/s Bharat Re-insurance Brokers Pvt. Ltd 1-1-130, 144/308, 3rd Floor, Navaketan Towers, S.D. Road, SECUNDERABAD 500034 (A.P.) Appellant(s) Versus Commissioner of Central Excise and Service Tax, HYDERABAD-I KENDRIYA SHULK BHAVAN, L.B STADIUM ROAD, BASHEERBAGH, HYDERABAD - 500004 Respondent(s)
Appearance:
Mr. K. Krishnamurthy, Adv. VMJ ASSOCIATES SKANDALAYA, OLD NO. 4, NEW #7, JUSTICE SUNDARAM ROAD, MYLAPORE, CHENNAI 600004 For the Appellant Mr. A.K. Nigam, A.R. For the Respondent CORAM :
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER ________________________________________ Date of Hearing: 26/08/2014 Date of Decision: 26/08/2014 Per B.S.V. MURTHY Brief facts of the case are that the appellants are engaged in providing taxable services under Insurance Auxiliary Services and discharging service tax on the same. During the verification of their records, it was observed that they were in receipt of re-insurance brokerage commission, on which service tax was not paid under the plea that the service falls under the category of export. Further scrutiny revealed that the appellant was in the business of Insurance Broking with Composite License issued by the IRDA. The appellants are undertaking broking service in respect of direct insurance as well as reinsurance. They were paying service tax under Insurance Auxiliary Service in respect of brokerage received from primary insurers in India but did not pay service tax on brokerage received from overseas re-insurers. As regards the activity undertaken, the appellant acts as reinsurance broker and arranges for reinsurance of Indian Insurance companies with the overseas insurer. The activity of reinsurance is undertaken when the potential loss to the risk is too great for the original insurer to bear alone. The appellant identifies reinsurer located abroad for the Indian companies and negotiates the terms and contracts between them. For this service the appellant receives commission called reinsurance brokerage. By and large, the appellant provides service to the Indian Insurance Companies. It appeared that the service rendered by the appellant was not in the nature of export of service inasmuch as it was essentially performed in India and there was no physical receipt of payment in convertible foreign exchange and hence, the same cannot be quantified as export. As per the information provided by the appellants, the appellants had received an amount of Rs. 1,84,03,181/- as reinsurance brokerage commission from the overseas reinsurers and the service tax including Cess worked out to Rs. 18,95,527/-. Proceedings were initiated and thereafter culminated in confirmation of demand of service tax of Rs. 18,95,527/- with interest and penalty has also been imposed. The appeal has been dismissed because the appellant failed to deposit the entire amount of tax as per the stay order passed by the Commissioner (Appeals).
2. Learned counsel on behalf of the appellant submitted that the appellants have strong case on merits and therefore, the Commissioner (Appeals) should have heard the appeal on merits without insisting on any pre-deposit. He relied upon the decision in case of National Engg. Ind. Ltd. Vs. Commissioner of Central Excise, Jaipur [2009 (15) S.T.R. 68 (Tri.-Del.)].
3. Learned A.R. on behalf of Revenue drew our attention to the Stay Order No. 1022/2011 dated 18.10.2011 in the case of very same appellant on the very same issue, wherein this Tribunal has directed the appellant to deposit approximately 50% of service tax demanded for hearing the appeal. He also relied upon the decision in the case of Suprasesh G.I.S & Brokers P. Ltd. vs. Commissioner of Service Tax, Chennai [2009 (13) S.T.R. 641 (Tri.-Chennai)] wherein in similar circumstances, the Tribunal had held that service tax is liable to be paid by the broker in India and cannot be considered as Export of Service. This was upheld by Honble High Court of Madras as reported in 2012 (25) S.T.R. J126 (Mad.).
4. In counter, learned counsel submitted that even if it is so, the decision in the case of National Engg. Ind. Ltd. (supra) takes a contrary view and when there are conflicting decisions, stay has to be granted. He relied upon the decision of Honble High Court of Karnataka in the case of Binani Zinc Ltd. vs. Asst. Collector of Central Excise, Cochin [1995 (77) E.L.T. 514 (Kar.)].
5. After hearing both sides and considering the records, we find that the decision in the case of National Engg. Ind. Ltd. (supra) cannot be applied to the present case. In that case, the services were provided to foreign company for whom orders were received from Railways. The Foreign supplier received the amount from Indian Railways for the goods supplied, the discount / remuneration for the Indian company was paid by Railways in Indian rupee instead of paying consideration in foreign exchange to the foreign supplier and thereafter, the foreign supplier sending the discount/brokerage in foreign currency to the broker/agent. In that case, service was provided to the service receiver abroad and consideration was in fact indirectly received in foreign currency. In the present case, the appellant provided service to Indian Insurer who has paid the remuneration to the appellant in Indian currency. Prima facie, the facts are not comparable and therefore, the decision is not applicable. In the appellants own case as well as in the case of Suprasesh G.I.S. & Brokers P. Ltd. (supra), this Tribunal in similar circumstances has taken a view that the appellant does not have a prima facie case. Since in the appellants own case, this Tribunal had required that the appellant should pre-deposit approximately 50% of the tax demanded, we consider that if the appellant deposits a sum of Rs. 9 lakhs (Rupees Nine lakhs only) as pre-deposit within 8 weeks from today and reports compliance to the Commissioner (Appeals), the Commissioner (Appeals) may treat it as sufficient for hearing and proceed to hearing the appeal on merits. In the result, the impugned order is set aside and the matter is remanded to the Commissioner (Appeals) with a direction to note the compliance and decide the matter on merits. Needless to say that the appellant shall be given reasonable opportunity to present their case. We make it clear that we have not expressed any opinion on the merits of the case.
(Operative portion of the order has been pronounced in open court) (S.K. MOHANTY) JUDICIAL MEMBER (B.S.V .MURTHY) TECHNICAL MEMBER /vc/