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2024 (4) TMI 824 - AT - Service TaxDisallowance of Cenvat credit of service tax paid on medical insurance of the employees and their families - reversal of Cenvat credit under Rule 6(3) wrongly calculated - Short payment of interest on late paid service tax on services received from an Associated Enterprise from outside India - Non payment of service tax on certain imported services - levy of Service tax on legal fee paid - penalties. Disallowance of Cenvat credit of service tax paid on medical insurance of the employees and their families - denial of credit on the ground that the appellant was unable to provide the breakup - HELD THAT:- The break-up was available in the SCN itself and the entire period was before 1.4.2011. Therefore, as per the findings of the Commissioner, this demand cannot be sustained. Demand of Rs. 1,15,14,385/- for the period 2008-2009 to 2010-2011 on the ground that the reversal of Cenvat credit under Rule 6(3) was wrongly calculated - HELD THAT:- The Commissioner committed an illegality in denying the benefit merely because this position had not been pointed out during audit. His second reasoning cannot also be accepted. If the appellant had not fulfilled the conditions of the exemptions and was not entitled to the exemption from service tax for the services which it had rendered to the SEZ units and for that reason they were not exempted, the question of any reversal under Rule 6(3) does not arise. The very basis for the SCN and the Commissioner to say that reversal has to be done as per Rule 6(3) was that the output services were exempted. When the audit was conducted and all the records were available with the department and the invoices of the recipient of the exempted services and the amounts received from them were examined, if the Commissioner doubts that the receivers of service were SEZs, he must have some basis to say so. Nothing to the effect is coming out of the order - it is found proper to remand this part of the demand to the Commissioner with a direction to examine the invoices and record if the exempted services in question were rendered to units in SEZ or not and accordingly, re-calculate the demand, if any. Short payment of interest on late paid service tax on services received from an Associated Enterprise from outside India - HELD THAT:- In the absence of any stipulation to the contrary, all laws are presumed to be only prospective and not retrospective because men are expected to arrange their affairs as the law is and are not required to anticipate what the law is likely to be and arrange their affairs accordingly. Of course, nothing prevents any legislation being given retrospective effect but in the absence of any such stipulation, all laws should be treated as having only prospective effect - the amendment dated 10.5.2008 was only prospective and it does not apply to services rendered and accounted for prior to this date. Therefore, for the past transactions, the liability to pay service tax fell on the appellant only in August 2008 when it paid its Associated Enterprise and interest was correctly calculated and paid from August 2008. No interest was payable from 10.5.2008 to August 2008. The demand on this head needs to be set aside. Non payment of service tax on certain imported services - HELD THAT:- The question is if there is a service provider and service recipient relationship and if there was a taxable service and consideration was paid for it. Indisputably, the appellant was enjoying the service of professional indemnity insurance and it was the service recipient. The insurance was not being provided by its parent company but by the insurance company abroad which is the service provider. For this service, the appellant paid an amount as consideration. However, since the insurance was taken by the parent company covering the appellant also, the premium was also paid by the parent company and the appellant reimbursed to its parent company its share of the premium. Therefore, looking at the total transaction, we find in favour of the Revenue and against the appellant on this count. The appellant is liable to pay service tax on this service. As far as the dispute regarding calculation is concerned, we find it proper to remand the matter to the Commissioner to consider the submissions made by the appellant and determine the amount of service tax payable. Service tax on legal fee paid- Rs. 8,185/- - HELD THAT:- The case of the appellant is that legal service was not covered under ‘Support Service for Business of Commerce” under section 65(104c). Service tax on legal service was introduced only from 1.9.2009. It had paid the amounts for the period August 2008 to September 2008 when it was not taxable. The department has incorrectly considered it as a service rendered during 2009-2010 - Since this issue requires verification of facts, it is found that this also needs to be remanded to the Commissioner for verification of facts and determining the service tax payable, if any. Penalties - HELD THAT:- As it is already found in favour of the appellant with respect to most demands, all penalties under section 80 of the Finance Act set aside. Appeal allowed in part, partly rejected and partly remanded.
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