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2016 (11) TMI 1291 - CESTAT MUMBAI

2016 (11) TMI 1291 - CESTAT MUMBAI - TMI - Demand of the amount payable under reverse charge method recovered from the service provider - insurance auxiliary service - demand of the amount of that tax which has, allegedly, been recovered by the appellant from the agent - section 73A of Finance Act, 1994 - reverse charge mechanism - Held that: - The appellant has paid the tax on commission paid to agents on ‘reverse charge’ basis and appellant is, under CENVAT Credit Rules, 2004, entitled to take .....

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vened section 73A of Finance Act, 1994 - appeal allowed - decided in favor of appellant-assessee. - APPEAL NO: ST/86000/2015 - ORDER NO:A/93128/16/STB - Dated:- 13-4-2016 - Shri M V Ravindran, Member (Judicial) And Shri C J Mathew, Member (Technical Shri V. Sridharan, Sr. Advocate with Shri S.S. Gupta, Chartered Accountant for the appellant Shri V.K. Singh, Special (AR) for the respondent Per: C J Mathew: Appellant, M/s HDFC Standard Life Insurance Company Ltd, registered as per rule 4 of Servic .....

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to the particular clause in the agreements of the appellants with their agents, proceeded on the premise that such reimbursements were collection of tax in excess that, under section 73A of Finance Act, 1994, is required to be credited to the Central Government. The impugned order held that ₹ 93,83,99,657/- reimbursed by agents of the appellant towards the service tax liability that devolved on the appellant between April 2006 and September 2013 was to be recovered. 2. The adjudicating aut .....

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11D of Central Excise Act, 1944, the definition of person liable to pay tax in rule 2(1)(d)(iii) of Service Tax Rules, 1994 when insurance auxiliary services are rendered, rule 4A of Service Tax Rules, 1994 which prescribes inclusion of the tax amount, rule 3(1) of CENVAT Credit Rules, 2004 permitting credit of tax paid on any input or input service received by the provider of output service, rule 4(7) of CENVAT Credit Rules, 2004 that requires the value of input service and tax thereon to be pa .....

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rance agent here), it cannot be said that full payment of service tax payable is made to the provider of service. In normal cases, the payment of service tax is also made by the recipient of service to the provider of service. In cases of tax liability o reverse charge method of paying the service tax payable to the government by the recipient of service, it is deemed that the recipient of service has made the payment of service tax to the provider. Instead of the provider of service paying the .....

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T Credit Rules or from the perspective of service tax Credit (sic) Rules, the recipient of service is required to deposit the service tax if he has collected any amount from any person which he is not required to collect. The collection of amount of service tax from the provider of service by the recipient would negate the very principle of indirect taxation where the provider of service collects the tax from the recipient of service and pays to the government i.e. the incidence of tax is passed .....

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o Section 11D of the Central Excise Act are not applicable to the case in hand as there is no provision in Section 11D of Central Excise Act equivalent to Section 73A(2) of Finance Act, 1994… … The findings supra by the adjudicating authority appear to stem from the provisions cited in the impugned order. 3. One of the foundations of the finding is that section 73A(2) of Finance Act is a unique and unparalleled provision that does not admit to the binding precedent of decisions ren .....

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entral Excise, Vadodara [20111 (263) ELT 698 (Tri-Ahmd)] and GTC Industries Ltd v. Commissioner of Central Excise, Vadodara [2004 (176) ELT 728 (Tri-Del)]. We find it difficult to attune ourselves to these apparently contradictory perspectives that appear to have guided the Commissioner and his authorised representative. 4. The adjudicating Commissioner bases the recovery order on the premise that liability to bear the incidence of tax is also mandated upon the person liable to pay the tax as a .....

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n the person liable to pay the tax. That, in the absence of a specific provision in the tax law, is beyond the jurisdictional competence of the tax collector. It is certainly to the good that tax administrators study and comprehend the principles that should govern indirect taxation but such principles can neither substitute for nor govern interpretation of the taxing provision. Tax can be collected only in accordance with the law and it is that law which must be invoked in effecting recovery. 5 .....

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under, an obligation in another sub-rule of the same provision covering any person cannot have been intended by the sovereign legislature to apply to the specified person in the first sub-rule. This proposition cannot but be considered favourably, and particularly, in the context of the observation of the adjudicating Commissioner that a parallel provision is not found in section 11D of the Central Excise Act, 1944. Considering the peculiarity of service tax as a destination-based tax with taxab .....

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rely without relevance in determining the extent to which section 73A of Finance Act, 1994 can be resorted to by tax authorities. We note that the cited decisions address the issue of duties having been collected in excess of that deposited in the credit of Central Government by the manufacturing entities in each of these cases. We are not entirely sure if the facts in the dispute before us is one of collection of tax in excess of that deposited to the credit of the Central Government. To end th .....

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x so paid on reverse charge basis and, thus, in effect recovers a portion of the tax liability from the service provider. We have not been informed if, in accordance with normal business practice, the provider of service raises an invoice for the commission amount but, even if it was issued, it is moot that the invoice would incorporate the tax amount considering that the insurance agent is not required to credit the tax to the Central Government - a responsibility devolving on the appellant as .....

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gned by their Lordships in Mafatlal Industries Ltd v. Union of India [1997 (89) ELT 247 (SC)] thus: 97. It was contended by the learned counsel for the appellants-petitioners that Section 11D provides for double taxation. It was contended that sub-section (1) of Section 11D makes the manufacturer liable to pay duty which he collects from the buyer as part of the price of goods even where the manufacturer has already paid the duty at the time of removal. We do not think that there is any foundati .....

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g made it is found that the duty collected and paid over by the manufacturer is more than the duty due according to law, such surplus amount shall either be credited to the Fund or be paid over to the person who has borne the incidence of such amount in accordance with the provisions of Section 11B. It is obvious that if in a given case, the manufacturer has collected less amount as representing the duty of excise than what is due according to law, he is not relieved of the obligation to pay the .....

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oods may be later. So, if excise duty due is already paid by the manufacturer, and later collected by him when the goods are sold, such collection, need not be paid to the Government. Only if the duty has not been paid already or if any excess is collected over and above the duty already paid, then only an occasion arises for payment of the duty collected or excess collected - and this is the purport of Section 11D. The said section (Section 11D) should be understood in the above practical and b .....

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ssee first collected the tax from the buyer of the goods and then remits the amount to the government. Section 11D has to be read keeping this scheme in view. Therefore, the provisions for every person who is liable to pay duty........ and has collected any amount from the buyer of any goods in any manner representing as duty of excise, shall forthwith pay the amount so collected to the credit to the Central Government has application only when equivalent duty had not been deposited at the time .....

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e tax amount irrespective of the quantum or stage of recovery from the person who bears the burden of tax. There is a distinct dichotomy, in both Central Excise Act, 1944 and Finance Act, 1994, of the obligation to credit the tax with Central Government and the recovery of the amount from the other person. And that is a dichotomy that does not brook any latitude whatsoever and its acceptance by Revenue is amply evidenced by circular no. 870/8/2008-CX dated 16th May 2008 which clarifies that sect .....

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Saran [2012-TIOL-37-SC-ST], the Hon ble Supreme Court was called upon to decide whether the principal who was, by law, designated as assessee under section 65 of Finance Act, 1994 could, in enforcing contractual obligations, be allowed to recover the service tax dues paid by it for the services rendered by a contractor and it was held that: 26. As far as the submission of shifting of tax liability is concerned, as observed in paragraph 9 of Laghu Udyog Bharati (supra), service tax is an indirec .....

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