2007 (7) TMI 168 - AT - Service Tax

Contention that Motor Vehicle Insurance is not liable to tax is wrong as General Insurance Business (Nationalization) Act is not applicable to Finance Act Demand challenged on account of time bar is set aside as appellant has not approached the C. govt. for granting exemption under the Act

Summary

Issues:
Challenge to Order-in-Appeal on levying service tax for Motor Insurance activity; Failure to register under Finance Act, 1994; Adjournments taken by appellant's Advocate; Appellants' contention on exemption under General Insurance Business Act; Jurisdiction to recover amount; Invocation of larger period; Applicability of exemption to Motor Vehicle Insurance; Failure to seek clarification or pay service tax; Declaration of details under Finance Act, 1994; Imposition of penalty on State Government Department.

Analysis:
The appellant challenged the Order-in-Appeal levying service tax on the Motor Insurance activity, as they failed to register under the Finance Act, 1994. The matter faced multiple adjournments due to the appellant's Advocate, delaying final hearing since 2005. Despite opportunities, the appellants did not appear to argue. The appellant contended that they were exempt under Section 36 of the General Insurance Business Act for Motor Vehicle Insurance, arguing against the jurisdiction to recover the amount and the invocation of a larger period.

The learned DR argued that the exemption under the General Insurance Business Act does not apply to service tax matters, specifically for Motor Vehicle Insurance concerning Government vehicles. The Department had jurisdiction to levy service tax as the appellants did not seek clarification or pay the tax in time, justifying the invocation of a larger period under Section 73 of the Finance Act, 1994. The appellants' failure to declare details under the Act further supported this argument.

The Tribunal carefully considered the submissions and counter filed by the Revenue. Despite granting numerous adjournments, the appellants did not pursue the matter effectively. The Tribunal noted the absence of specific Circular or Notification granting exemption from service tax. The reference to the General Insurance Business Act for exemption was deemed inapplicable to the Finance Act, 1994. The appellants should have sought clarification or exemption from the Central Government, which they failed to do. Consequently, the plea on time-bar was rejected, and the appellants were directed to pay the service tax. No penalty was imposed on the State Government Department, and as the Revenue did not appeal this point, the impugned order was upheld, leading to the rejection of the appeal.