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2019 (12) TMI 1127 - CESTAT MUMBAICENVAT credit - exempt service or not - compensation for performance of a separate service - endowment policies - ULIP scheme policy - applicability of rule 6 of CENVAT Credit Rules, 2004 - exclusions from assessment for the different periods in the two categories of policies - while Revenue asserts these to be covered by the inclusive component of ‘exempted services’ and, thereby, rendering rule 6 of CENVAT Credit Rules, 2004 to be applicable, it is the primary submission of the appellant that such vivisection of a composite consideration for a particular service is not the intent of the said Rules. HELD THAT:- It would not be out of place to peruse the inclusive component of the definition of ‘exempted service’ which pertains to services that are not leviable to tax under section 66 of Finance Act, 1994. The most proximate of services that are subject to the levy are the entries in section 65(105) of Finance Act, 1994 as stated therein and it is only those which are exempted that can be held to be covered by the said definition which, having been described as the principal component, does not require restatement. It is obvious the legislature had not intended superfluity in incorporating the services that are not leviable to tax in the definition. There is no definition of ‘service’ in Finance Act, 1994 and, therefore, forecloses an ascription that is non-existent. Consideration, though essential to determination of value of taxable service, is not the sole indicator of existence of a service. The presumption against superfluity in interpretation of statutes binds us to search for, and determine, the nature of inclusion. As we are dealing with the schema of mechanism for avoiding the cascading effect of taxation upon the final customer who bears the burden of indirect tax levy, it can be posted that there is a recipient of service with whom the buck stops. Such stoppage could be owing to lack of further commercial engagement of the service or because of the non-existence of such service within the jurisdiction to tax. Tax laws have nothing to do with the last consumer in the market chain. It would, therefore, leave us with no option but to determine that legislative intent of ‘services that are not leviable to tax under section 66 of Finance Act, 1994’ to be those to which the Union cannot extend its taxing arm. Not unnaturally, such service, unacknowledgeable in the tax jurisdiction, fails the test of utilization in rendering of further service. These, therefore, cannot be ‘input services’ and the inclusive portion of ‘exempted services’ must be construed as referring to such and not to services that, though not yet, may still be subject to levy. The proposition of Revenue that subsequent taxability imprints upon it the description of ‘non-leviable under section 66 of Finance Act, 1994 fails and, with it, the support for sustaining the demand in the impugned order. The detriments also fail. Appeal allowed - decided in favor of appellant.
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