TMI Blog2022 (10) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... se that these are, in reality, commission for executing sales of policy and, with subterfuge, transferred to provider of service to overcome the regulatory stipulations on payment to their agents. Effectively, it is averred that this is commission paid outside the pale of law but, notwithstanding the egregiousness, discharge of tax liability by the assessee in accordance with reverse charge mechanism would suffice for tax authorities to turn a Nelson s eye to this breach; in other words, compliance with the law of the land is not mandatory as long as the exchequer s pound of flesh is parted with - The proper course of action available to tax authorities was to bring this alleged breach to the attention of the regulator but with that tax kitty may have been that much poorer. Levy of service tax - payments admittedly made to M/s ICICI Bank and M/s ICICI Securities towards display of publicity materials, enhancing customer awareness and obtaining customer feedback - period from July 2012 to March 2014 - HELD THAT:- It is on record that the assessee had produced evidence of tax payment by M/s ICICI Bank and M/s ICICI Securities for the various activities undertaken by them at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionship between insurance companies and the agents insofar as each individual policy is concerned. It is the contention of the tax authorities that non-compete fee and exclusivity bonus paid to agents from 2007 to 2011 was not consideration for such forbearance as the agents were not working exclusively for them and, hence, was commission , and liable to tax of Rs.24,25,76,897 on the amount disbursed by stealth beneath the radar of regulatory oversight. An amount of Rs.1,16,14,038 was demanded on reward and recognition paid in 2007-08 and 2008-09 and Rs.4,90,27,118 was demanded on market support and administrative support paid between October 2007 and March 2008 to M/s India Infoline Insurance Services Ltd on the ground that these were hidden commission as the amounts far surpassed the actual performance of the said agent. Demands of Rs. 3,53,00,000 and Rs.16,87,49,842 for 2012-13 and 2013-14 were also charged on payments made to M/s ICICI Bank and M/s ICICI Securities for market support and of Rs. 34,00,000 andRs. 75,82,682 on payments made to M/s ICICI Securities for 2012-13 and 2013-14 towards advertisement and publicity as being hidden commission intended to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be detracted from but the mere filing of an appeal does not alter the authority of the order so impugned unless it be stayed or until it be overruled. As an adjudicating authority, expected to be compliant with judicial discipline, the correct approach on his part cannot be faulted. Nor has Learned Authorized Representative been able to adduce any decision to the contrary. Furthermore, several decision of the Tribunal have, thereafter, reaffirmed the interpretation in Bajaj Allianz Life Insurance Co Ltd and others v. Commissioner of Central Excise Service Tax, Pune-III [2019-TIOL-2748-CESTAT-MUM], in Commissioner of CGST, Mumbai Central v. Birla Sunlife Insurance Co Ltd [2022 (1) TMI 969 CESTAT MUMBAI] and in Max Life Insurance Co Ltd v. Commissioner of Central Excise Service Tax [2019 (12) TMI 121 - CESTAT NEW DELHI]. In re HDFC Standard Life Insurance Co Ltd, the order of adjudication holding that 2. The adjudicating authority, Commissioner of Central Excise Mumbai-II, notes that non-corporate agents of the appellant were, under agreement, compelled to remit 60.3 % of the tax liability on agent s commission to the appellant and that the notice for recovery has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 on to the recipient of service by the provider of service. Therefore, the provisions of Section 73A(2) should cover the situation involved in the current case where the recipient has, instead of paying the service tax from his own pocket has recovered a part of the amount from the provider of service representing as service tax. Therefore, he is required to deposit the same to the government in terms of section 73A(2) of the Finance Act, 1994. The case law cited by the assessee pertaining to 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. was taken note of and, observing that 4. The adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain the recourse to recovery in the impugned order. xxxxxx 9. In service tax levy, too, the person liable to pay the tax is required to deposit the 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 Section 11D of Central Excise Act, 1944 is not liable to be invoked even if the mandated payment for availing Cenvat credit on inputs used in exempt goods is recovered from the buyers of the output goods. That this ratio applies to service tax levy and that recovery of amount already paid would be tantamount to double deposit is enunciated by the Tribunal in Sangam India Ltd. v. Commissioner of Central Excise, Jaipur-II [2012 (28) STR 627 (Tri.-Del.)]. 10. In Rashtriya Ispat Nigam Ltd. v. Dewn Chand Ram Saran [2012-TIOL-37-SC-ST = 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provider of the service is not forbidden by law. To the extent that the contributor has not ventured to avail credit of such contributions, there is no detriment to public revenue. And to the extent that the appellant has not deprived the provider of the service of any amount in excess of the tax deposited by the appellant, there can be no substance to the allegation that appellant has contravened Section 73A of Finance Act, 1994. 6. Consequently, the appeal of Revenue is without any source of sustenance and merits dismissal. 7. In so far as the demands under section 73(1) of Finance Act, 1994 is concerned, we have already noted that the recovery has been fastened on appellant-assessee on the premise that these are, in reality, commission for executing sales of policy and, with subterfuge, transferred to provider of service to overcome the regulatory stipulations on payment to their agents. Effectively, it is averred that this is commission paid outside the pale of law but, notwithstanding the egregiousness, discharge of tax liability by the assessee in accordance with reverse charge mechanism would suffice for tax authorities to turn a Nelson s eye to this breach; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Mumbai [2016 (44) STR 465 (Tri-Mumbai)]. There has been no averment that this plea was made before the adjudicating authority. It would, therefore, be appropriate to have these aspects of payments towards rewards and recognition adjudicated afresh by the jurisdictional Commissioner. 10. It has been submitted by Learned Chartered Accountant that payment towards market support rendered by M/s India Infoline Services Ltd for the period from 1st October 2007 to 31st March 2008 on which tax of Rs.4,90,27,118 has been confirmed in the adjudication order was, in reality, towards salaries of employees hired by the agent for sale of policy at the behest of the assessee and that there is no evidence to substantiate the allegation that this payment is linked to the business generated by the agent. It would appear that this submission has not been examined in the impugned order and would need to be decided afresh. 11. An amount of Rs.20,40,49,842 has been confirmed for the period from July 2012 to March 2014 on payments admittedly made to M/s ICICI Bank and M/s ICICI Securities towards display of publicity materials, enhancing customer awareness and obtaining customer feedback. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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