TMI Blog2016 (3) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... ous agents, foreign as well as Indian, against services received from them for finalising deals with reinsurers but Such agents would not come in the category of insurance agents defined in Section 65(54) of the Finance Act, 1994 - Held that: the agents in question were not soliciting or procuring insurance business including business relating to the continuance, renewal or retrieval of policies of insurance rather they were engaged to help out is finalising deals with reinsurers. This component of demand has been confirmed under reverse charge mechanism in terms of Rule 2(1)(d)(iii) of Service Tax Rules, 1994 where the liability of the appellant would arise only in relation to service rendered to it by insurance agent. As the commission was paid by the appellant to persons who did not qualify to be called insurance agents the reverse charge mechanism was not applicable and therefore, the appellant being service recipient was not liable to pay service tax. In addition the liability to service tax in respect of commission paid to persons based abroad would not fall on the appellant also because reverse charge mechanism in such cases became applicable from 18.04.2006 referred to Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce) Rs. As per worksheet prepared division-wise (value of taxable service) Rs. Difference in value of taxable service on which service tax not paid Rs. Difference in service tax payable and paid Rs. 2002-03 1815415240/- 1911826717/- 96411477/-- 4820574/- (iii) ₹ 3,846/- on the ground that cenvat credit was taken on electricity and water charges during the period 2004-05 which was not admissible. However, this amount has been deposited vide TR-6 challan dated 04.05.2006 alongwith interest of ₹ 12,679/-. (paid vide TR-6 challan dated 07.08.2007). 2. The appellant has contended as under: (i) The demand of ₹ 3,49,642/- was confirmed in respect of services which were received from insurance intermediaries and not from insurance agents. The services of various brokers (foreign and Indian) was received by the appellant for finalising deals with reinsurers and such brokers would be covered in the category of intermediaries and not in the category of insurance agent as defined under Section 65(54) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 73, this amount need not have been made part of the show cause notice; in other words, no show cause notice was required to be served to the appellant in respect of this amount in which case the question of imposing any penalty in respect of this component of demand would not arise. 6. As regards the demand pertaining to service tax on brokerage/ commission paid to commission agent , the appellant has pleaded that it paid commission to various agents, foreign as well as Indian, against services received from them for finalising deals with reinsurers. Such agents would not come in the category of insurance agents defined in Section 65(54) of the Finance Act, 1994 in terms of which the insurance agent is defined as under: Insurance agent has the meaning assigned to it in clause (10) of Section 2 of the Insurance Act, 1938 (4 of 1938) As per section 2(10) of the Insurance Act, 1938 insurance agent means an insurance agent licensed under section 42 who receives or agrees to receive payment by way of commission or other remuneration in consideration of his soliciting or procuring insurance business including business relating to the continuance, renewal or retriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e itself to the audit party. Further due to such reconciliation problem faced by the appellant, it has ended up paying excess service tax in 2004-05. Thus, it is hard to fathom as to how the appellant can be held guilty of wilful mis-statement or suppression of facts to evade service tax. In the show cause notice the only paragraphs pertaining to wilful mis-statement and suppression of facts (para 3 and 4) are reproduced below: 3. As per Section 68(1) of the Finance Act, 1994, every person providing a taxable service is required to pay service tax at the rate specified in Section 66 in such manner and within such period as may be prescribed. Further as per Section 70 of the Finance Act, 1994, every person liable to pay service tax shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and as such frequency as may be prescribed. Since M/s Oriental Insurance Company Limited Delhi are having centralised registration at Delhi, they are responsible for collecting correct data from their various offices situated all over India in respect of the premium collected by them and pay the service tax to the credit of the Central Government. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow adjustment of duty short paid out of the duty paid in excess, the fact remains that this judgment has been passed in the appellant s own case and based on that judgment the appellant has pleaded that it should be allowed to adjust the said short payment of ₹ 48,20,754/- out of the excess service tax paid during the period 2004-05. We are not entirely in agreement with the CESTAT observation quoted above but we also not relying upon the said judgment in this case. The very fact that such a pleading has been made and the amount has actually been paid in excess in 2004-05 shows the bonafies of the appellant. In these circumstances, we are unable to discern any evidence which would even suggest that there was any wilful mis-statement or suppression of facts on the part of the appellant with regard to the short payment of the said amount of duty. In the case of Anand Nishikawa Co. Ltd., vs. CCE - 2005-TIOL-118-SC-CX, the Supreme Court held as under: It is settled law that mere failure to declare does not amount to wilful suppression. There must be some positive act from the side of the assessee to find wilful suppression. Therefore, in view of our findings made herein abov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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