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2022 (1) TMI 969 - AT - Service TaxValuation - commission payable to agent is inclusive of service tax or not - Revenue was of the view that respondent are not authorized to deduct the amount from the commission - demand u/s 73A(2) of Chapter V of the Finance Act, 1994 - HELD THAT - The issue is no longer res-integra and has been decided in the favour of respondents, by CESTAT in case of M/S BAJAJ ALLIANZ LIFE INSURANCE CO. LTD, TATA AIA LIFE INSURANCE CO. LTD, KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD, INDIA FIRST LIFE INSURANCE CO. LTD, BHARATI-AXA LIFE INSURANCE CO LTD VERSUS COMMISSIONER OF C.E. S.T., PUNE-III, C.S.T., PUNE-I, MUMBAI-II, VII, VI (VICE-VERSA) 2019 (6) TMI 104 - CESTAT MUMBAI where it was held that The service tax initially paid by the Appellants and later collected from the insurance agents by adjusting the commission paid, cannot be directed to be deposited under Section 73A(2) of Finance Act, 1994. Appeal dismissed - decided against Revenue.
Issues:
Recovery/deduction of Service Tax from Insurance Agents, Interpretation of Section 73A(2) of the Finance Act, 1994, Applicability of Previous Tribunal Decisions Analysis: 1. Recovery/Deduction of Service Tax from Insurance Agents: The appeal pertains to the recovery/deduction of Service Tax from Insurance Agents by the respondent, who is engaged in providing life insurance services. The issue revolves around whether the respondent was authorized to deduct the Service Tax amount from the commission payable to agents. The revenue contended that the respondent should pay the amount again under Section 73A(2) of the Finance Act, 1994, as it amounted to double benefit. The respondent had deducted the Service Tax amount from the commission paid to agents and deposited it with the Government. 2. Interpretation of Section 73A(2) of the Finance Act, 1994: The crux of the matter lies in the interpretation of Section 73A(2) of the Finance Act, 1994, which states that any person collecting an amount not required to be collected as Service Tax must pay it to the Central Government. The revenue relied on certain decisions to support their claim, while the respondent argued that the issue had already been settled in favor of the respondents by a previous tribunal decision involving a similar case of Bajaj Allianz Life Insurance Co. Ltd. The tribunal in the earlier case had ruled that the Service Tax initially paid by the appellants and later collected from the insurance agents did not need to be deposited under Section 73A(2) of the Finance Act, 1994. 3. Applicability of Previous Tribunal Decisions: The tribunal considered the previous decision involving Bajaj Allianz Life Insurance Co. Ltd, where it was held that the expenses incurred in training insurance agents could not be included in the gross taxable value of commission paid to them for determining the service tax liability. The tribunal found merit in the argument presented by the respondent's counsel, citing the previous decision, and consequently dismissed the appeal filed by the revenue. In conclusion, the appellate tribunal upheld the impugned order that dropped the demands raised by the revenue against the respondent. The decision was based on the interpretation of Section 73A(2) of the Finance Act, 1994, and the applicability of previous tribunal decisions in similar cases involving recovery of Service Tax from insurance agents.
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