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TMI Blog2023 (6) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... ys them commission in terms of Section 40A of the Insurance Act, 1938 [IA]. Apart from commission and incentive appellants also incur expenses towards inland and overseas training of the agents in certain cases. The department vide show cause notice No. LTU/ST/MAX/02/2014-15 dated 14.10.2014, for the period April 01, 2013 to March 31, 2014 raised the following three issues: (i) Demand of Service tax amounting to Rs. 77,67,147/- in respect of expenditure of Rs. 6,28,40,993/- incurred by the appellants on foreign training of insurance agents; (ii) Demand of Service tax amounting to Rs. 47,70,218/- on the expenditure of Rs. 3,85,94,000/- incurred by the appellants by way of reimbursement of certain expenses related to the training of insurance agents; (iii) Demand of Service tax amounting to Rs. 5,22,45,987/- on account of 4% debit adjustment from the insurance commission paid by the appellant to their Insurance/Corporate Agents. 3. At the outset, it may be worthwhile to point out that identical issues were also raised and adjudicated upon by the department (this being a follow up show cause notice for subsequent period), and came to be decided by the decision of this Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance in support of their proposition on the decision of this Tribunal in the case of Intercontinental Consultants & technocrats Pvt. Ltd. Vs. Union of India [2013 (29) STR 9 (Del.)] as affirmed in Union of India Vs. Intercontinental Consultants & Technocrats Pvt. Ltd. [2018 (10) GSTL 401 (SC)] and has also placed reliance in the case of M/s Bajaj Allianz Life Insurance Co. Vs. Commissioner of Central Excise & Service Tax, Pune-III [Final Order No. 86013-86023/2019] as also their own case and referred to in para 3 above. 5.3 (i) Reference is also invited to Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 whereby it could be argued that it does provide for inclusion of certain expenses towards the value for charging of service tax, however, it is to be noted that the rule itself uses the words "in the cause of providing of taxable service" and no such taxable service is rendered while undergoing and providing training to the agents. For greater clarity, Rule 5(1) ibid is reiterated hereunder. Rule 5. Inclusion in or exclusion from value of certain expenditure or costs - (1) Where any expenditure or costs are incurred by the service provider in the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... client rendering services of clearing and forwarding operations in any manner; (ix) the commission, fee or any other sum, by whatever name called, paid to such agent by the insurer appointing such agent in relation to insurance auxiliary services provided by an [insurance agent; and] (x) the amount realised as demurrage or by any other name whatever called for the provision of a service beyond the period originally contracted or in any other manner relatable to the provision of service." 5.4 As also stated aforesaid that the training for insurance agents, is mandatory and imperative and is not only statutorily prescribed but is also a must for knowledge enhancement and to imparting the necessary skills beside the development and acquisition of work habits and product knowledge for the insurance agents. Section 42 of the Insurance Act mandates that individual insurance agents must possess the requisite qualification and/or practical training and are required to pass the examination as may be specified by the IRDA. A mandatory 50 hours of training to agents prior to issuance of the license is provided for. Without a doubt, training per se is not a part of appellants service - i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service. (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed Explanation.-For the purposes of this section,- (a) "consideration" includes- (i) any amount that is payable for the taxable services provided or to be provided; (ii) "money" includes any currency, cheque, promissory note, letter of credit, draft, pay order, travellers cheque, money order, postal remittance and other similar instruments but does not include currency that is held for its numismatic value;. (c) "gross amount charged" includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment, and any amount credited or debited, as the case may be, to any account, whether called "Suspense account" or by any other name, in the books of account of a person liable to pay serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt and any form of payment by issue of credit notes or debit notes and book adjustment, and any amount credited or debited, as the case may be, to any account, whether called 'suspense account' or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprises." Thus, any payment by whatever mode paid viz. cheque, credit card, direct debit to account or in any other form including issuance of credit or debit notes is a component of the value for purpose of determination of the tax liability. It has been contended that the agents do not owe any amount(s) to the appellant requiring a set off against commission paid to the said agents. Thus, the 4% debit adjustment from commission payable to the agents is no more than a discount as per agreed contractual terms. The service tax shall be payable and is to be paid on the actual commission paid to the said insurance agents. To similar proposition of law is the ratio of this Tribunal's decision in the case of Mccann Erickson (India) Pvt. Ltd. Vs. Commissioner of Service Tax, Delhi [2008 (10) STR 365 (Tri.-Del.)], Euro RSCG Advertising Ltd. Vs. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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