Customs, Excise and Gold Tribunal - Tamil Nadu
Suprasesh General Insurance Services ... vs Commissioner Of Service Tax on 18 June, 2007
Equivalent citations: 2007[8]S.T.R.513, [2007]10STT22
ORDER P.G. Chacko, Member (J)
1. In the impugned order ld. Commissioner confirmed a demand of service tax of over Rs. 1.4 crores against the appellants under Section 73(1) of the Finance Act, 1994 along with interest on tax under Section 75 of the Act. He also imposed penalties on them under Sections 76 and 78 of the Act. The present application is for waiver of predeposit and stay of recovery in respect of these amounts.
2. After examining the records and hearing ld. Sr. Counsel for the appellants and ld. SDR for the Revenue, we have found prima facie case for the assessee against the above demand. The subject matter of the demand is reinsurance brokerage received in Indian currency by the appellants from certain overseas companies, hereinafter referred to as "reinsurers". The appellants were functioning as reinsurance brokers between General Insurance Companies in India and the reinsurers abroad. There is no dispute regarding the nature of the service rendered by the appellants to the reinsurers. They accept it to be coming within the ambit of "Insurance Auxiliary Service" defined under Section 65 (55) of the Finance Act, 1994. Section 65 (56) of the Act lists out the persons coming within the definition of "intermediary or insurance intermediary". Reinsurance brokers also have come to be listed under Section 65 (56) as "intermediary or insurance intermediary". The Commissioner classified the appellants as "reinsurance brokers" within the meaning of Regulation 2(m) of the IRDA (Insurance Brokers) Regulations, 2002 and adopted certain other definitions from the Insurance Act, 1938, as permitted under the Finance Act, 1994. Ld. Commissioner demanded the above amount of service tax from the appellants for the period July, 2001 to April, 2006. The assessee took the stand that in terms of Notification No. 6/1999-ST. as clarified by the CBEC as well as the Export of Service Rules, 2005, they were not liable to pay service tax on the reinsurance brokerage received by them. Ld. Commissioner rejected this argument and confirmed the demand of tax. Ld. Counsel has pointed out a subsequent amendment to the charging section under the Finance Act, 1994, which was brought about with effect from 1.5.06. He has conceded that, by virtue of such amendment, the service rendered by the appellants could be subjected to levy of service tax from 1.5.2006 if it was shown by the Revenue that the transaction involved export of service. But it is the definite case of the appellants, reiterated by the ld. Counsel, that, prior to 1.5.2006, their service was not exigible to service tax. Ld. SDR reiterates the findings of the Commissioner and opposes the application for waiver and stay.
3. We have considered the submissions. Ld. Counsel has relied on the apex Court's judgment in J.P. Boda and Co. Pvt. Ltd, v. Central Board of Direct Taxes 1996 (217) ITR (ST.)5 and the Tribaunal's decision in PSA Sical Terminals Ltd. v. CC, Tuticorin in support of his argument that the reinsurance brokerage received in Indian rupee could be deemed to have been received in convertible foreign exchange on considerations similar to those which were applied by the apex Court. Ld. SDR points out that the decisions cited by ld. Counsel were considered by this Bench in Final Order No. 452/07 dated 20.4.07 and that both the cases were distinguished. We find that it is not in dispute that the brokerage was received in Indian currency. The question which now arises for consideration is whether the service, designated as "Insurance Auxiliary Service", was exported by them. In the Board's Circular cited by the ld. Counsel, it was clarified that, even after rescission of Notification No. 6/99-ST, export of service, otherwise taxable under the Finance Act would be exempt from such tax. After a perusal of the Board's Circular and the relevant Notifications viz. 6/99-ST, 2/03-ST, 21/03-ST and after consideration of the Export of Service Rules 2005, we have found good case for the appellants. The tenor of the provisions appears to be that there shall be no service tax on export of services, irrespective of the manner in which consideration for the service is received by the service provider. It is not in dispute in the present case that the service recipients are resident abroad and have no office in India. After examining the provisions in the light of these facts, we have taken the above view. Accordingly, there will be waiver of predeposit and stay of recovery in respect of the amounts of tax and penalties.
4. Ld. SDR urges us to post the appeal for early disposal having regard to the high stake involved in the case. Ld. Counsel has no objection. The appeal is directed to be posted to 2.8.2007.
(Dictated and pronounced in open court)