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2021 (5) TMI 869 - AT - Service TaxLiability of Interest - point of taxation - point of time when liability to pay service tax on re-insurance services provided under the pool agreement arises - extended period of limitation - penalty. Extended period of limitation - HELD THAT:- Even when an assessee has suppressed facts, the extended period of limitation can be evoked only when “suppression’ is shown to be willful and with an intent to evade payment of service tax - Commissioner has not recorded any finding that even if the appellant had suppressed the fact of having received the amount, it was willful and with an intent evade payment of service tax. In fact, the Commissioner observed that there was no malafide intention on the part of the appellant to suppress this fact - the extended period of limitation could not have been invoked. Any demand up to March 2013 would, therefore, barred by limitation. Delay in Payment of Service Tax - HELD THAT:- Section 64VB (5) of the Insurance Act read with rule 59 of the Insurance Rules, clearly excludes re-insurance from the general rule that no risk should be assumed until the premium is paid. The consideration in re-insurance policies can be like in any other contract (past, present or future). The issue, therefore, that arises for consideration is when service is rendered and service tax is due but the appellant is not able to pay it until the accounts are squared up and thereby delays paying the service tax, than whether in such a situation the appellant is liable to pay interest on the delayed payment, considering that the delay is not on account of the fault of the appellant - A similar issue comes up often in Central Excise matters when the transaction value of the goods is unknown, either partly or fully when the goods are cleared. This happens with Government contracts which fix the price based on a formula, several elements of which (say cost of raw material or minimum wages of the labour) are not known at the time of clearance. Later, when they get the details, they pay the differential excise duty. Although this is a service tax matter, the provisions are pari materia and if service tax is due on a date but is paid much later because data is not available with the assessee, interest has to be paid. Thus, the demand of interest from the appellant for the period post March 2013 upto March 2014 is justified. Penalty - HELD THAT:- While dealing with the issue as to whether the extended period of limitation under the first proviso to section 73 of the Finance Act could have been invoked in the facts and the circumstances of the case, it has been found as a fact that the suppression of facts was not willful nor was there any intent to evade payment of service tax. Thus, for all the reasons stated while dealing with the extended period of limitation, penalty under section 78 of the Finance Act could not have been imposed upon the appellant. The Commissioner was, therefore, not justified in imposing penalty under section 78 of the Finance Act as there was no deliberate suppression of facts with intention to evade payment of service tax. In the result it is held that since the extended period of limitation could not have been invoked the demand of any interest up to March 2013 is not justified. However, the demand of interest for the period post March 2013 up to March 2014 is sustained. Penalty could also not have been imposed under section 78 of the Finance Act - Appeal allowed in part.
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