2019 (3) TMI 47 - AT - Service Tax

Scope of SCN - Insurance Auxiliary Service or not - period from October 2003 to June 2008 - LTU unit or not - scope of SCN - SCN premises that the services provided by them were under Insurance Auxiliary Service whereas the appellants were providing only General Insurance Service - Held that - The contention regarding provision of services only under General Insurance Service has been contended by the appellant right from the reply to the Show Cause Notice and also in the personal hearing and has also been taken note of by the adjudicating authority in paragraph 7 of his Order. However, there is no further discussion, analysis or finding on this aspect. In our view, if the appellants are only engaged in providing General Insurance Service, the Show Cause Notice issued to them demanding tax under Insurance Auxiliary Services cannot sustain. This would be best ascertained by the adjudicating authority in de novo adjudication. Accordingly, for the limited purpose of ascertaining the fact that the appellants had indeed provided only General Insurance Service and not Insurance Auxiliary Service, the matter is remanded to the adjudicating authority - Appeal allowed by way of remand.

Issues:
1. Tax liability under "Insurance Auxiliary Service" for services provided.
2. Finalization of provisional assessments and correctness of taxable value.
3. Alleged inclusion of non-taxable amounts in the tax notice.
4. Compliance with Service Tax Rules for provisional assessments.
5. Discrepancy between services provided and tax demand.
6. Remand for de novo adjudication.

Analysis:
1. The appellants were issued a Show Cause Notice for providing services under "Insurance Auxiliary Service" and not discharging a service tax liability of ?77,85,009. The Commissioner confirmed the tax liability and imposed penalties under Sections 76 and 78 of the Finance Act, 1994. The appellants argued that the assessments were provisional and the taxable value was correctly considered, but the Commissioner did not verify this claim adequately.

2. The appellants contended that the taxable value included non-taxable amounts, and they had paid tax correctly based on the correct taxable value. They provided evidence from M/s. PACL confirming the same. The Commissioner did not grant sufficient time for substantiating the claim, violating principles of natural justice. The appellants emphasized compliance with Service Tax Rules for provisional assessments.

3. The appellants argued that they only provided "General Insurance Service" and not "Insurance Auxiliary Service." The adjudicating authority acknowledged this contention but did not provide further analysis. The Tribunal remanded the matter for de novo adjudication to ascertain if the appellants indeed provided only General Insurance Service, considering all submissions made by the appellants.

4. The Tribunal noted that the appellants had joined the Large Taxpayer Unit in Chennai and that the Show Cause Notice was made answerable to the Commissioner in Chennai. The main arguments presented were regarding the provisional assessment with the LTU in Chennai and the discrepancy between the services provided and the tax demand under Insurance Auxiliary Services.

5. The Tribunal found that if the appellants were only engaged in providing General Insurance Service, the tax demand under Insurance Auxiliary Services could not be sustained. Therefore, the matter was remanded for further adjudication to determine the nature of services provided by the appellants accurately.

6. The appeal was allowed by way of remand for de novo adjudication to ascertain whether the appellants provided only General Insurance Service and not Insurance Auxiliary Service. The adjudicating authority was directed to consider all submissions and evidence presented by the appellants during the re-adjudication process.

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