2014 (12) TMI 246 - AT - Service Tax

Waiver of pre deposit - application for recalling the stay order - earlier entire amount of tax was directed to be deposited - Insurance as well as reinsurance broker - export of service or not - Held that - High Court had passed the interim order in 2009 insofar as it directed the Revenue for quantification of the dues and there is a temporary stay of the recovery. The matter was adjourned on several occasions and by Note Sheet order dated 2.6.2014, this Bench directed the learned special counsel to verify the latest position before the Hon ble High Court. We find that the Tribunal in the earlier order, in the applicant s own case 2008 (11) TMI 82 - CESTAT, CHENNAI , after considering the Board s circular and the decision of the Hon ble Supreme Court, on merit, held against the assessee. Period of dispute in the present case is prior to the circular dated 16.4.2010. On a query from the Bench, the learned counsel submits that the demand of tax in the present case is within the normal period of limitation. Hence the applicant failed to make out a strong prima facie case for waiver of predeposit of entire amount of dues. - stay order modified - Partial stay granted.

Summary

Issues:
1. Recall of exparte stay order without going into merits of the case.
2. Consideration of demand of duty on merit and extension of limitation period.
3. Appeal filed before Hon'ble Madras High Court.
4. Predeposit of tax amount.
5. Interpretation of circular dated 16.4.2010.
6. Nature of transactions involving reinsurance brokerage.
7. Applicability of Export of Services Rules, 2005 and relevant notifications.
8. Requirement of physical receipt of remuneration in convertible foreign exchange.
9. Decision on waiver of predeposit of entire amount of dues.

1. Recall of Stay Order:
The judgment involves the applicant filing a miscellaneous application to recall an exparte stay order dated 23.9.2013 without delving into the merits of the case. The Tribunal, after hearing both sides, found sufficient reason to recall the stay order and allowed the miscellaneous application.

2. Demand of Duty on Merit:
The learned counsel for the applicant argued that the Tribunal upheld the demand of duty on merit in an identical issue for an earlier period. The Hon'ble High Court had directed quantification but stayed recovery pending notice. The Revenue contended that the circular dated 16.4.2010 was not relevant to the present case, and the Tribunal had previously passed orders based on earlier circulars and Supreme Court decisions.

3. Appeal before High Court:
Both parties referred to appeals filed before the Hon'ble Madras High Court regarding the demand of duty on merit and the stay on recovery. The Tribunal considered the interim orders passed by the High Court and the relevance of past judgments in similar cases.

4. Predeposit of Tax Amount:
The Tribunal directed the applicant to predeposit a specific amount within a set period and waived predeposit of the balance dues upon compliance, staying recovery during the appeal's pendency.

5. Interpretation of Circular:
The Tribunal analyzed the circular dated 16.4.2010 concerning the nature of service transactions, particularly in reinsurance brokerage, to determine its applicability to the case at hand.

6. Nature of Transactions:
The judgment detailed the nature of transactions involving reinsurance brokerage, emphasizing the role of intermediaries in negotiating contracts between Indian and overseas entities and receiving commissions for their services.

7. Applicability of Export Rules and Notifications:
The Tribunal discussed the applicability of Export of Services Rules, 2005, and relevant notifications, considering the physical receipt of remuneration in convertible foreign exchange as a determining factor.

8. Requirement of Foreign Exchange Receipt:
The judgment highlighted the necessity of physical receipt of remuneration in convertible foreign exchange for the notifications to apply, citing previous decisions to support the conclusion.

9. Decision on Waiver of Predeposit:
Based on the period of dispute and the lack of a strong prima facie case for waiver, the Tribunal directed the applicant to predeposit a specified amount, with the balance dues waived upon compliance, and recovery stayed during the appeal's pendency.

This comprehensive analysis of the judgment covers the various issues addressed by the Tribunal, providing a detailed overview of the legal considerations and decisions made in the case.