2018 (6) TMI 801 - AT - Service Tax

Business Auxiliary Services - appellant acted as an agent of ICICI Prudential Life Insurance Limited and ICICI Housing Finance Limited and for service rendered, received commission - Extended Period of Limitation - Held that - It is evident from the facts of the case that the service provided by the appellant is not falling within the category of Insurance Business but is covered by the definition of BAS. Consequently, the plea taken by the appellant that the service tax involved therein has already been paid by the insurance company under reverse charge basis under Rule 2(1)(d) of the Rules is rejected. Extended period of limitation - Held that - It is seen that the appellant has failed to file the necessary service tax returns and have suppressed from the Department, that they were rendering the service during the disputed period. Consequently, there is no reason to interfere with the finding of the lower authorities that the demand can be raised under the extended period of limitation. Penalties u/s 76 and 78 - Held that - the recent judgment of the Tribunal in the case of Ramawat Construction Co. 2017 (5) TMI 705 - CESTAT NEW DELHI is application to the facts of the present case in which it has been held that the penalties under both Sections 76 and 78 are liable to be imposed - penalties upheld. Appeal dismissed - decided against appellant.

Summary

Issues: Liability for service tax under Business Auxiliary Service (BAS), applicability of reverse charge mechanism, penalties under Sections 76 and 78 of the Finance Act, 1994.

Liability for service tax under BAS:
The appellant acted as an agent for two companies and received commission for services rendered. The Revenue contended that the commission received was liable for service tax under BAS. The appellant argued that the service tax had already been paid by the insurance company under the reverse charge mechanism. However, the Tribunal found that the services provided did not fall under the category of Insurance Business but were covered by the definition of BAS. Therefore, the plea that the service tax had already been paid was rejected, and the service tax demand for the disputed period was upheld.

Applicability of reverse charge mechanism:
The appellant claimed that the service tax had been paid by the insurance company under the reverse charge mechanism specified in Rule 2(1)(d) of the Service Tax Rules, 1994. However, the Revenue argued that the commission received was not related to Insurance Business but fell under BAS. The Tribunal agreed with the Revenue's interpretation, stating that the appellant's services were not covered by the reverse charge mechanism for Insurance Business, leading to the rejection of the appellant's argument.

Penalties under Sections 76 and 78:
The appellant contended that penalties under Sections 76 and 78 were not leviable, citing a specific case law. The Revenue argued for the imposition of penalties based on the appellant's failure to file relevant ST-3 returns and pay service tax for the disputed period. The Tribunal referred to a recent judgment regarding penalties and held that penalties under both Sections 76 and 78 were applicable. Consequently, the Tribunal upheld the impugned order and rejected the appeal, emphasizing the liability for service tax under BAS and the imposition of penalties as justified based on the facts presented during the proceedings.