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2023 (5) TMI 339 - AT - Service TaxDetermination of service tax liability - deposit insurance premium collected by the appellants DICGC - premium amount collected by DICGC has to be necessarily considered as inclusive of service tax element or not - period October 2011 to March 2012 and April 2012 to September 2012 - determination of interest payable by the appellants DICGC for the delay in payment of service tax on the due date - refunds sanctioned twice not rectifying the mistake apparent on record. Levy of service tax on the deposit insurance activity undertaken by the appellant DICGC - HELD THAT - On examination of the provisions of the DICGC Act 1961 it was clarified by the CBIC vide letter No.354/164/2008-TRU dated 24.02.2009 that DICGC is not taxable under the taxable service of general insurance business ; this view was reiterated by CBIC letter dated 22.04.2009. However after the re-examination of all the relevant issues the CBIC by letter dated 20.09.2011 clarified that the deposit insurance activity of DICGC falls within the ambit of section 65(105)(d) of the Finance Act 1994 and is chargeable to Service Tax under General Insurance Business - the appellants DICGC are required to pay service tax on the taxable service of deposit insurance with effect from 20.09.2011. Whether the insurance premium should be considered as cum-tax-value? - HELD THAT - The matter is no more res integra in view of the various decisions taken by this Tribunal which were also upheld by the Apex Court. In particular it is found that Kolkata Bench of CESTAT in the case of COMMR OF C. EX CUS. PATNA VERSUS ADVANTAGE MEDIA CONSULTANT 2008 (3) TMI 59 - CESTAT KOLKATA has held that Where the gross amount charged by a service provider for the service provided or to be provided is inclusive of service tax payable the value of such taxable service shall be such amount as with the addition of tax payable is equal to the gross amount charged. The plea advanced by the department on the issue of cum-tax-value of premium collected for deposit insurance by the appellants DICGC that such treatment of gross amount of premium collected by appellants DICGC as inclusive of service tax will tantamount to reduction in premium amount which is solely decided by the Reserve Bank of India and the appellants DICGC does not have any unilateral authority to alter the rate of premium to be collected from the insured banks and they have to obtain the prior approval of the RBI has been found to have been overcome by specific approval of the RBI as follows - appellants DICGC are eligible for the cum tax benefit. In view of this we do not find any grounds for interfering with the conclusion arrived at in the impugned order passed by the Commissioner of Central Excise (Appeals) LTU Mumbai that premium amount collected has to be necessarily considered as inclusive of the service tax element . Whether interest payable by the appellants for the delay in payment of service tax on the due date require determination in terms of service tax legislation; and whether such amount of interest is required to be redetermined? - HELD THAT - The facts of the case have been shown with respect to the ST-3 returns filed by the appellants DICGC and hence there exist reasonable ground for accepting the arguments advanced by the appellants DICGC. However there are no other records such as invoice receipts online transactions summary statement of accounts of the appellants DICGC for establishing the dates on which the payments were made by various banks towards deposit insurance premium that was collected by the appellants as gross amount of taxable services. In order to arrive at a conclusion on the correct date on which the service tax is due to be paid as per the provisions of Rule 6 of Service Tax Rules 1994 with certainty upon confirmation of the facts the matter should go back to the original Appellate Authority i.e. Commissioner of Central Excise (Appeals) LTU Mumbai. Whether findings made by the Commissioner of Central Excise (Appeals) LTU Mumbai in the impugned order in respect of claims made by the appellants on appropriation of the refunds sanctioned twice not rectifying the mistake apparent on record require redetermination by the Commissioner of Central Excise (Appeals) LTU Mumbai? - HELD THAT - Considering the legal position in respect of Section 11 of the Central Excise Act 1944 providing for recovery of sum due to the Government has not been made specifically applicable to service tax matters under Section 83 of the Finance Act 1994 and the factual position that the show cause notice proceedings has not been concluded and thus there were no confirmed demands on the date of passing of the order by the concerned Assistant/Deputy Commissioner even to consider under Section 87 of the Finance Act 1994 the first appellate authority cannot be found fault - The appellants DICGC may be given liberty to raise any issues before the Commissioner of Central Excise (Appeals) LTU Mumbai when the matter is remanded for denovo adjudication. Further while taking up the matter in denovo proceedings for redetermination of the interest payable for actual delay in payment of service tax the appellants DICGC shall be given reasonable opportunity of being heard in person and for submission of the relevant documents in support of their claim - the matter needs to be sent back to the first appellate authority to determine the actual amounts of refunds of service tax payable to the appellants DICGC. Appeal disposed off.
Issues Involved:
1. Whether the amount of premium collected by DICGC can be considered as inclusive of service tax. 2. Whether the Department is right in adjusting the refund amount under section 11 of the Central Excise Act, 1944 against the demand of interest for delay in payment of service tax. 3. Whether the due date for payment of service tax for DICGC is 6th May and 6th November or 6th June and 6th December. 4. Whether interest to the extent of Rs.19,20,30,665/- was appropriated twice from the refund amount sanctioned to DICGC. 5. Whether the Department was right in adjusting the amount of interest against the refund amount during the pendency of appeal and stay application in CESTAT. 6. Whether the department was right in not rectifying the mistake apparent on record under section 74 of the Finance Act, 1994 on the ground that the matter is subjudiced. Summary: 1. Inclusion of Service Tax in Premium: The Tribunal upheld that the premium amount collected by DICGC should be considered as inclusive of service tax. The Commissioner of Central Excise (Appeals) concluded that since DICGC cannot collect any amount over the prescribed premium rate by RBI, the premium amount collected is necessarily inclusive of the service tax element. This decision aligns with the judicial precedent set by the Supreme Court in similar contexts. 2. Adjustment of Refund Amount Against Interest: The Tribunal found that the Department's appropriation of refund amounts against unconfirmed interest demands was illegal. The Commissioner (Appeals) held that such appropriation before the confirmation of the demand is not in conformity with service tax provisions. The Tribunal directed the Commissioner (Appeals) to redetermine the actual amounts of refunds payable to DICGC after recalculating the interest on delayed payments. 3. Due Date for Payment of Service Tax: The Tribunal acknowledged the dispute regarding the due dates for payment of service tax. DICGC argued that the due dates should be 6th December and 6th June, based on the receipt of payments in November and May, respectively. The Tribunal remanded the case to the Commissioner (Appeals) to redetermine the correct due dates and the corresponding interest amounts, taking into account the actual dates of receipt of payments. 4. Double Appropriation of Interest: The Tribunal found no evidence that the interest amount of Rs.19,20,30,665/- was appropriated twice. The Commissioner (Appeals) had correctly held that the appropriation of refund amounts against unconfirmed interest demands was not in conformity with the law. 5. Adjustment During Pendency of Appeal: The Tribunal upheld the Commissioner (Appeals)'s decision that the Department should not have appropriated the refund amounts against interest during the pendency of the appeal and stay application in CESTAT. This action was deemed erroneous and not in line with the legal provisions. 6. Rectification of Mistake Apparent on Record: The Tribunal agreed with the Commissioner (Appeals) that the appeal regarding the refusal to rectify the mistake apparent on record was rendered infructuous. Since the appropriation of refund amounts towards interest liability was found to be erroneous, there was no need for further rectification. Conclusion: The Tribunal disposed of the appeals by upholding the Commissioner (Appeals)'s decisions on the inclusion of service tax in the premium and the improper appropriation of refund amounts. The case was remanded for redetermination of the correct amount of interest on delayed payments and the actual refunds payable to DICGC. The Tribunal directed the Commissioner (Appeals) to complete this exercise within a specified timeframe, providing DICGC with an opportunity to submit necessary documentary proof.
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