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TMI Blog2008 (10) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the lower authorities that with effect from 10/09/2004, the appellants are required to pay service tax at the revised rate. Coming to such conclusion, the lower authorities issued show cause notice to the appellants to discharge the differential service tax liability along with education cess for the period commencing from 10.09.2004 till the end of the policy. This demand was raised on the ground that the appellants had received advance premium from their customers at the lime of issuance of the general insurance policy. 3. The appellants contested the show cause notice on the ground that on the day of issuing the general insurance policy, the appellant had discharged the service tax liability as was in force during the period. Subsequent enhancement in the rate of service tax is not payable by them as the services rendered by them were on the date of issuance of general insurance policy. They also contested the show cause notice on the ground that in an identical issue, the Commissioner (Appeals) has passed an order in their fovour wherein the revenue has not filed any appeal. The adjudicating authority did not accept the contentions raised by the appellant and vide his imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premium received there on will alone attract service tax and the premium received prior to 01/07/94 will not be taxable. He draws attention to the CBEC Circular No. 65/14/2003 dated 05/11/2003 [reported in 2003 (59) RLT M32] to submit that the maintenance attract, which are entered prior to the date of bringing service under tax were not taxable. He would also draw our attention to the CBEC Circular No 62/11/2003 [reported in 2003 (58) RLT M9] and submits that it is the policy of the Government not to tax the services for earlier period before the services came into tax net. He draws our attention to the decision of the Tribunal in the case of Art Leasing Ltd. vs. CCE, as reported at 2008 (84) RLT 597 (CESTAT -Ban.)=2007 (8) STR 162 (T) submits that the hire purchase contract, which were entered by banking and other financial services were taxed at the rate on the day the hire purchase contract was entered and service tax collected on that amount. It is his submission that the EMI, which are collected do not bear the increased rate of service tax. He also draws our attention to an identical case of LFC Hire Purchase Company Ltd. vs. CC & CE (Appeals), Cochin as reported at 2008 (8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continuing service, as the terms and conditions are to provide the service for the whole year. It is the submission that this is a very unique and peculiar case and draws our attention to the explanation to Rule 6 of the Service Tax Rules, 2002. It is his submission that the case laws, which have been cited by the Ld. Counsel are not at all relevant. The facts in those cases and the facts in this case are different. As regards the Circular dated 2/5/95, it is his submission that levy was brought into force for the first time, while in the case of enhanced levy, the levy was already in existence. There was a subsequent enhancement on the rate of service tax. He would rely upon the decision of the Hon'ble Supreme Court in the case of CCE, Calcutta vs. Alnoori Tobacco Products, as reported at 2004 (63) RLT 463 (SC) = 2004 (170) ELT 135 (SC) would submits that the precedents need not be followed as the facts are different. In this case a case law which has been cited. 8. In a rejoinder, Ld. Counsel submits that the Circulars of CBEC on banking and other financial services are directly applicable and the ratio in the case of Alnoori Tobacco Products (supra) are directly applicable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n advance as provided under the provisions of Section 64VB of the Insurance Act, 1938 on insurance/assurance on the policy issued. The said Section 64VB of the Insurance Act, 1938 is as under:- "No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner. For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer." 14. It can be noticed from the above reproduced provision of the Insurance Act that the insurer's risk was covered only, after the premium payable is received by insurance company or a guarantee that it will be paid. This would indicate that the insurer is expected to render the services on the day when the premium is received by him. It is also to be noted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogic is applicable to the present case also. When the Hire Purchase Contract is entered, the taxable event occurs. We agree with the appellants that the installment payments are only obligations of the hirer. The finding of the Commissioner (Appeals) that the appellant continues to provide service during the payment of installments is not correct. Therefore, the rate of Service tax 'will be the rate prevailing on the date on which the contract is entered into. Consequently, the demand of differential amount applying the higher rate, which can into effect from 14.5.2003, will not be applicable in respect of the contracts entered prior to that date. Hence, we set aside the impugned order and allow the appeal with consequential relief, if any." 16. It can be noticed from the above reproduced order, that the Division Bench of the Tribunal was considering an identical situation of enhancement of the rate from a particular date. The facts in the case of Art Leasing Ltd., though may be of hire purchase agreement/contract, wherein the hire purchaser receives the payment subsequently by an EMI (Equated Monthly Installments) but Service Tax liability is discharged on the date of signing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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