Custom, Excise & Service Tax Tribunal
M/S Bajaj Allianz Life Insurance Co. Ltd vs Commissioner Of Central Excise, ... on 31 December, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. III Appeal No. ST/41/07 (Arising out of Order-in-Appeal No. P-III/094/06 dated 1.6.2006 passed by the Commissioner of Central Excise & Service Tax (Appeals), Pune-III). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) Honble Shri P.S. Pruthi, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Bajaj Allianz Life Insurance Co. Ltd. Appellant Vs. Commissioner of Central Excise, Pune-III Respondent Appearance: Shri Vinay Jain, C.A. for Appellant Shri B.K. Iyer, Supdt. (AR) for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) SHRI P.S. PRUTHI, MEMBER (TECHNICAL) Date of Hearing: 31.12.2014 Date of Decision: 31.12.2014 ORDER NO. Per: Anil Choudhary
The appellant M/s Bajaj Allianz Life Insurance Co. Ltd. is in appeal against the Order-in-Appeal No. P-III/094/06 dated 1.6.2006 passed by the Commissioner of Central Excise & Service Tax (Appeals), Pune-III.
2. The brief facts are that the appellant received input service from its Insurance Agent(s) and also the appellant provides certain incentives to its agent(s), which form part of remuneration, according to the Revenue. Accordingly, show-cause notice was issued dated 30.5.2005 putting the appellant to notice as to why not Service Tax of Rs.38,92,735/- be demanded on reverse charge basis ,in terms of Section 73(1) read with Section 68(2) of the Finance Act, 1994 read with Rule 2(1)(d)(iii) of the Service Tax Rules, 1994. Further penalty was also proposed under Section 76 and 78. The show-cause notice was adjudicated vide Order-in-Original dated 30.11.2005. The proposed demand was confirmed save and except the amount attributable to referral fee, which was paid to the Insurance Agent. Further, interest was also demanded and penalties were imposed under Section 76 and 78 of the Act. Being aggrieved, the appellant had preferred appeal before the Commissioner (Appeals), who vide the impugned order was pleased to reject the appeal. Being aggrieved, the appellant is in appeal before this Tribunal.
3. The appellant points out that there are two conditions precedent for levy of tax on reverse charge basis under Section 68(2), which are particular service to be notified by the Central Government and the second condition is that the manner of payment of such tax and the person concerned shall also be specified who will be liable to pay Service Tax. Further, the appellant points out that the notification in terms of Section 68 was published by the Central Government only on 31.12.2004 specifying in para 2 of the notification that the said notification shall come into force from 1.1.2005. As the period in dispute relates to the period prior to 1.1.2005, no Service Tax can be legally demanded and/or collected from the appellant assessee. Further, the appellant relies upon the ruling of Larger Bench of this Tribunal in the case of Hindustan Zinc Ltd. Vs. Commissioner of Central Excise 2008 (11) STR 338 (Tri-LB), wherein it was held as under: -
10.?As seem above, four services (as seen above) were (initially) specified in Part A of notification no. 36/2004 dated 31-12-2004. The service specified in Part B was omnibus, namely, any taxable service meaning thereby all types of taxable services provided by a person who is a non-resident or is from outside India and does not have any office in India. In other words, apart from the four services specifically mentioned as items (i), (ii), (iii) and (iv) in Part A, where any taxable service is provided from outside India, by a non-resident who does not have any office in India, the recipient became liable for paying service tax. It is clear that besides the services specified in Part A for which there may be specific reasons, so far as the service provided from abroad is concerned, the service provider could not be made liable to pay service tax and brought under the net of service tax in the absence of the apparent mechanism to collect and recover tax from them. A different provision, therefore, had to be made.
11.?It would appear that the phraseology of Rule 2(1)(d)(iv) and Part B of Notification No. 36/2004 is the same except that after referring to the taxable service, Rule 2(1)(d)(iv) also mentions the person i.e. the recipient liable to pay Service tax. But it is to be kept in mind that similarity was inevitable because both pertain to the same taxable service.
12.?We are inclined to think that the taxable service referred to in Part B of Notification No. 36/2004 is part of the taxable service referred to in various sub-clauses of clause (48) [now clause (105)] of Section 65. It need hardly be explained that a number of taxable services can be provided inside India as well as from abroad. For example, consulting engineer service itself can be provided both inside and from outside. Where the service is provided from outside India or by a non-resident who does not have office in India, it is clear that the provider of the service cannot be fastened with the liability, and therefore, a different provision has to be made with respect to such services. It is to be kept in mind that the levy is on rendering of the taxable service and not on the person. No sooner than the taxable event takes place, tax must be collected and therefore provision has to be made to fasten the liability to pay tax. As observed above, the person liable to pay the tax is a component of the tax scheme. Since the liability to pay service tax generally is on the provider of service, where liability is to be fastened on any other person, the service (s) in relation to which liability is to be so fastened, has also to be identified and specified. It is relevant to mention that services had been specified in the erstwhile sub-section (1A) of Section 68, itself, - corresponding to present sub-section (2) in which it has now been left to the Central Government to do so by a notification.
13.?On behalf of the appellant attention was drawn to the fact that whenever any addition was made in the list of taxable service for the purposes of Section 68(2), corresponding amendment was made in the Rules i.e. Rule 2(l)(d) of the Service Tax Rules. For example, the service in relation to business auxiliary service of distribution of mutual fund by mutual fund distributor or an agent and in relation to sponsorship service provided to any body corporate or firm located in India were specified by Notification No. 5/2005-S.T. dated 1-3-2005 and Notification No. 16/2006 dated 25-4-2006, respectively. Corresponding amendments were made inserting clauses (vi) and (vii) in Rule 2(1)(d) of the Service Tax Rules with effect from 1-4-2005 and 1-5-2006 which reflect the understanding of the Central Government that making amendment in the Service Tax Rules or the List of the services under Section 68(2) alone is not sufficient, and amendments have to be made in the Rules to make the person liable to pay service tax as well as in the List of taxable services to specify the taxable service(s) in relation to which such person is made liable to pay service tax. A combined reading of Notification No. 12/2004 and Notification No. 36/2004 would show that while the former makes the person i.e. the recipient of taxable service in India provided by a non-resident or from outside India liable to pay service tax - without specifying the taxable service, as such, in relation to which he is so made liable, Notification No. 36/2004 does not specify the person liable to pay service tax; it merely specifies the taxable services for the purpose of Section 68(2) of the Act. Both the notifications, therefore, have to be read as complimentary or supplemental to each other and in the absence of either, service tax cannot be collected or recovered (in respect of the specified services). Thus, the Larger Bench concurred with the view expressed in favour of the assessee. Accordingly, the appellant prays for allowing the appeal.
4. The learned AR relies on the impugned order.
5. Having considered the rival contention, we hold, in view of the notification published in the Gazette of the Central Government on 31.12.2004 and made effective from 1.1.2005, no tax can be demanded from the appellant assessee on reverse charge basis prior to 1.1.2005. We further observe that such payment made by appellant as receiver of service to its agent like gift, foreign trip as well as cash prizes, which are in nature of incentive, shall not form part of gross value of the taxable service. Thus, the appeal is allowed with consequential benefit, if any.
(Dictated and pronounced in Court)
(P.S. Pruthi) (Anil Choudhary)
Member (Technical) Member (Judicial)
Sinha
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