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2023 (9) TMI 1011 - AT - Service TaxLevy of penalty - benefit of closure under section 73(3) of Finance Act - differential service tax along with interest paid before issuance of SCN - HELD THAT - In the facts and circumstances of this case appellant had rightly deposited the tax, as clarified by Board Circular dated 17/09/2004 - further the appellant was a registered assessee, and have regularly deposited the admitted taxes and have filed periodical returns. It is further evident that the whole case is due to interpretational issue (change of opinion) on the part of the Revenue - it is further found in the facts and circumstances of this case, that the benefit of closure under section 73(3) has been wrongly denied to the appellant assessee, and no show-cause notice was required to be issued. The appellant is entitled to benefit of closure under Section 73(3) the Act - Appeal allowed.
Issues involved:
The issues involved in this case include the interpretation of the Service Tax law u/s 65(105)(zx) of the Finance Act, 2005 regarding the taxation of life insurance services, the applicability of Circular No. 80/10/2004-ST clarifying the scope of the newly introduced services, the determination of taxable value for group insurance policies, the payment of differential service tax, the invocation of extended period of limitation, and the imposition of penalty u/s 78. Interpretation of Service Tax Law: The appellant, a Life Insurance Company, started business in 2005 when Service tax on life insurance was introduced u/s 65(105)(zx) of the Finance Act. The taxable service was defined as any service provided in relation to the risk cover in life insurance. Applicability of Circular No. 80/10/2004-ST: The Board issued Circular No. 80/10/2004-ST clarifying the scope of the newly introduced services, stating that the risk cover in life insurance becomes subject to levy of service tax. The appellant complied with this Circular for group insurance schemes. Determination of Taxable Value for Group Insurance Policies: The Revenue conducted a verification and found that the entire premium collected for group insurance policies consisted of risk cover only. This led to a case of short payment of service tax, and the Revenue calculated the differential duty owed by the appellant. Payment of Differential Service Tax and Imposition of Penalty: The appellant, in response to Revenue's objection, reworked the service tax paid on group insurance policies and paid the differential amount along with interest. However, the Revenue issued a Show Cause Notice invoking the extended period of limitation, alleging non-payment of differential service tax and suppression. The Commissioner confirmed the demand and imposed a penalty under Section 78. Invocation of Extended Period of Limitation and Denial of Closure Benefit: The Revenue invoked the extended period of limitation and denied the benefit of closure under Section 73(3) of the Act. The appellant contested these actions, arguing that there was no suppression, fraud, or misstatement on their part. Judgment: The Tribunal found that the appellant had correctly deposited the tax as per the Board Circular. It noted that the case arose due to an interpretational issue on the part of the Revenue and that the benefit of closure under Section 73(3) was wrongly denied. The Tribunal allowed the appeal, setting aside the impugned order and granting the appellant the benefit of closure under Section 73(3) along with consequential relief.
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