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TMI Blog2024 (6) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... The actions of the appellant have not been shown to create any legal relations between the principal (insurance companies) and third parties. In fact the activities of the appellant mentioned above are other than that of selling insurance policy independently on behalf of the insurance companies and are limited to providing business support to the insurance companies and are correctly classifiable under the category of Business Support Services under section 65(104c) of FA 1994. Hence their appeal must fail. Interest - HELD THAT:- Once duty is paid belatedly, interest become payable automatically. Hence the payment of interest demanded under section 75 of FA 1994 cannot be faulted. Penalties - HELD THAT:- Once the matter was within the knowledge of the department leading to the issue of an earlier SCN, the question of suppression of information with intention to evade payment of duty leading to equal penalty will not arise on the same facts, in the subsequent SCNs. Hence the penalty under section 78 of FA 1994 merits to be dropped and is so ordered - the penalty imposed under section 77 of FA 1994 alone upheld. Extended period of Limitation - HELD THAT:- The demand for duty is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e companies. They took us through Agreement dated 17/09/2004 entered into by the insurance companies with the appellant (bank). They stated that it was agreed that the bank will provide insurance helpdesk in all their branches, which will be used for servicing of the insurance business of the insurance companies. The insurance companies undertook to reimburse the bank of the charges reasonably incurred for servicing of the insurance business procured through the bank or other business of the insurance company. The insurance company also undertook to impart training to the appellants employees. It was also agreed that the insurance company may jointly with the bank conduct campaigns, roadshows, or any other marketing initiative with the objective of creating awareness about the insurance products and generating interest on the importance of insurance, which may ultimately help to improve the business of the insurance company. That the charges reimbursed by the insurance companies do not come within the meaning of Business Support Service. That the insurance business done through these companies, who are the service providers, is covered under Insurance Auxiliary Service falling unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he direct employees of the insurance companies called upon the branch managers for collecting from the bank leads and references of clients for sourcing insurance business, calculating the premium of the insured, etc. They also received payment for the supply of infrastructure support facilities, like table, chair, telephone, etc, to the personnel of the insurance companies who visited the bank in furtherance of insurance business. The contention of the appellant that they received commission from the insurance company for providing insurance auxiliary services in the name of expenses is not acceptable. Companies pay the agent a commission usually as a percentage of the insurance premium on periodic basis, which is not so in this case. Only when payments are linked to volume of business procured, they would amount to deliberation for soliciting business. Payments made by insurance companies agents are governed by statutory provisions of the Insurance Act. Hence, the actual role played by the appellant was in supporting the business of the insurance companies and that the charges do not relate to insurance services. She referred to the judgement of a coordinate bench of this tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rting to enter into transaction on behalf of the principal, i.e., to create, modify or terminate contractual obligations between his principal, whom he represents, and some third person. 6.3 The question of agency is always a mixed question of law and fact. As held by the Hon ble Supreme Court of India in Assam Small Scale Ind. Dev. Corp. Ltd. Ors. Vs M/s. J.D. Pharmaceuticals Anr. [Appeal (Civil) 6324 of 2005, dated 07/10/2005], the expressions 'principal' and 'agent' used in a document are not decisive. The nature of transaction is required to be determined on the basis of the substance there and not by the nomenclature used. Documents are to be construed having regard to the contexts thereof wherefor 'labels' may not be of much relevance. It is no longer in doubt or dispute that while interpreting the terms of agreement, it is necessary to look to the substance of the matter rather than its form. Use of a terminology may not be sufficient to lead to a conclusion that the parties to the contract in fact intended that the said status would be conferred. 6.4 When we examine the intent of the Agreement between the appellant and the insurance companies we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lature amended the Finance Act with effect from 14/05/2015. As discussed above the appellant is not an agent of the insurance companies. Hence by merely calling an amount received as reimbursement would not make it reimbursements. Even to claim exclusion of expenses incurred as an agent, it should be clear from the terms of Agreement that the payments are not for a contractual obligation and that the insurance companies were required to incur such expenditure in the course of business outside the Agreement, which was incurred by the appellant on the insurance companies behalf, and the same would be reimbursed to them. In the present case the payments received by the appellant represent the gross value of taxable service rendered by them to the insurance companies as per the contractual obligations mentioned in the Agreement. They are not received against payments to be made by the insurance companies on their own account which has temporarily been paid by the appellant. These are hence not reimbursable charges. The above judgment and that of the Tribunal in Edelweiss Tokyo Life Insurance (supra) hence does not help the appellants cause. 7.2 The judgments pertaining to Solaris Chemi ..... 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