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TMI Blog2024 (8) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... g was held by the member (Judicial). Whether the appellant is eligible to avail credit of the service tax paid by them on the invoices issued by automobile dealers? - HELD THAT:- In the case on hand, the department does not dispute the payment of tax. The department has not initiated any proceedings against the dealers alleging that there are no services provided and that no tax has to be paid by them. The SCN is issued to the appellant alleging that the credit availed on such services is ineligible. The Cenvat Credit Rules,2004 provide for a mechanism to the service provider to avail and utilize credit of the tax paid on input services used for providing output services. This credit scheme ensures smooth flow of duties , eliminating the cascading effect of duties /taxes. The very same issue came up for consideration before the Tribunal in the case of Cholamandalam MS General Insurance Company Ltd. [ 2021 (3) TMI 24 - CESTAT CHENNAI ]. The facts and allegations are identical. The Tribunal followed the decision of the Jurisdictional High court in the case of Modular Auto Ltd. [ 2018 (8) TMI 1691 - MADRAS HIGH COURT ] and it was held that ' It is not disputed that the dealer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved in both these appeals being analogous they were heard together and are disposed by this common order. 1. Brief facts are that, the appellant, M/s. Royal Sundaram Allianz Insurance Company Ltd., public limited company, having Head office at Karappakkam, Chennai is engaged in providing General Insurances in the nature of Motor, Health, Personal Accident and Fire and Burglary insurance services and Miscellaneous policies. They have centralized registration, and are registered for payment of service tax under reverse charge mechanism on commissions paid to insurance agents, etc. 2. Intelligence was gathered by DGCEI, Chennai zonal unit that the appellant is availing cenvat credit wrongly on the basis of invoices issued by dealers of Motor Vehicles containing description of services which were never actually provided by the automobile dealers to the appellant. Accordingly, investigation was initiated and documents recovered, statements recorded. The investigations was done as under : (i) Investigation into the alleged irregular availment of cenvat credit by appellant on the basis of invoices issued by the automobile dealers (excluding the dealer, M/s. TVS Sundaram Motors) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment that the appellant has wrongly availed cenvat credit. Show cause notice for the different periods 2010-2011 to 2014 to 2015 and SOD for the period April 2015 to June 2017 was issued to the appellant proposing to disallow the credit and to recover the same along with interest. After due process of law, the adjudicating authority disallowed the credit, and confirmed the demands along with interest and imposed penalties. Aggrieved, the appellants are now before the Tribunal. 5. The Ld. Counsel Shri Raghavan Ramabadran appeared and argued for the appellant. It is submitted that the appellant is engaged in providing general insurance services pertaining to motor insurance, health insurance, property insurance, engineering insurance, liability insurance and other miscellaneous insurances. 5.1 At the time of sale of the automobiles, the automobile manufacturers through their established dealer network assist the vehicle buyers to obtain the insurance. From the view point of the insurance companies, including the Appellant, the dealers of automobile manufacturers are usually the first point of contact with the buyers of motor vehicle and hence for motor insurance too. Accordingly in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not disputed at the service providers end, the same cannot be questioned at the service recipient s end. This is for the reason that the assessment based on the returns in the hands of the service provider has become final and the Department has accepted those returns based on the declarations made by the service provider. Having accepted and not disputed it, the Department cannot be allowed to raise the issue at the service recipient s end. 5.5 To support this argument Ld. Counsel relied on the judgment of the Hon ble High Court of Madras in M/s. Modular Auto Ltd. CCE Chennai 2008-VIL-541-MAD-ST. The ratio laid in this case was followed by the Tribunal in the case of M/s. Ford India Pvt. Ltd. Vs Commr. of GST CCE - 2019-VIL-182 CESTAT CHE-ST. 5.6 The very same issue in this appeal on identical set of facts was considered by the Tribunal in the case of Cholamandalam MS General Insurance Co. Ltd. Vs CCE - 2021 (3) TMI 24 CESTAT CHENNAI [2021 (47) GSTL 263 (Tri.-Chennai)]. The Tribunal in the said case followed the judgment of the Hon ble jurisdictional High Court in the case of M/s.Modular Auto Ltd. (supra) to hold that when it is not disputed that the dealer has paid service ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded that no services as described in the invoices have been provided by the dealers to the appellant. Though there is no whisper in the Statement of Demand (SOD) No. 14/2018 dated 13.04.2018 issued for the period April 2015 to 2017, that the service provided by the dealer is liable for payment of service tax under Reverse Charge Mechanism (RCM) in terms of notification 30/2012-ST, the adjudicating authority in para 13 of the OIO has made discussions in this regard. So also, there is no mention in the SOD that the activities cover reimbursable expenditure. However, in para 14.2 the adjudicating authority has held that the amounts paid by appellant to dealer are reimbursements and therefore no service tax is payable by dealer on such amounts, and therefore appellant is not eligible for credit. The Ld. Counsel argued that by considering the notfn no. 30/2012 and the amount as reimbursements, the adjudicating authority has travelled beyond the SCN. 6. The Ld. Counsel adverted to the decision of the Tribunal in the case of Karur Vysya Bank Ltd. VS CCE Trichy - 2019 (22) GSTL 63 (Tri.Chennai). It is pointed out that in the said case, the department had issued SCN demanding service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struct to pay any remuneration or reward whether by way of commission or otherwise for soliciting or procuring insurance business in India to any person except an insurance agent or an intermediary or insurance intermediary. 8.1.1 As per IRDA Circular Ref: 011/IRDA/Brok-Com/August/2008 dated 25/08-2008 issued under Section 14 of IRDA Act, 1999, which limits the payment of Commission or brokerage to 10%. The circular specifically state, No payment of any kind including administrative or servicing charges is permitted to be made to the agent or broker in respect of the business of which he is paid agency commission or brokerage. 8.2. The appellant maintains business connection with automobile dealers for procuring insurance policy from the vehicle buyers. The tie up with manufacturer brings out the mechanism for rendering such insurance services and they inform the dealer the rate of commission for rendering such services. The appellant is not authorized to outsource such insurance services. As per Section 40 of Insurance Act, 1938, only licensed Brokers are permitted to do insurance business and entitled to receive commission. For the purpose of receiving the commission, the dealers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) are not applicable as the facts are different. 8.4 The arguments of the appellant on the second issue as to the credit disallowed on computer generated unsigned invoices was countered by referring to the discussion made by adjudicating authority in para - 40 of OIO dt. 23.12.2016. It is argued that the Board vide F.No.224/44/2014-CX.6 dt. 06.07.2015 had issued instructions for option to issue invoices in electronic form and authentication of digital signature. This came into effect only on 6.7.2015. So the credit availed by appellant on unsigned invoices issued by e-mail from M/s. Honda Cars is not valid and the demand has been correctly confirmed by the impugned order. 8.5 The third issue is regarding two sets of invoices showing different description of services. The description of service in the invoice of the account maintained by the dealer (TVS Sundaram Motors) is shown as additional incentive . The description of the service in the corresponding invoice of the appellant shows as Data processing and Policy related activities . The appellant has not been able to explain the discrepancy. The credit has been righty denied by the adjudicating authority. 9. It is asserted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors (KM) was promoting Royal Sundaram Alliance General Insurance Co. Ltd (RS) as one of the preferred insurers to car buyers? A: Yes Q: Do you agree that if a customer agreed to take insurance fresh or renewal from RS, that KM processed and issued the policy? A: Yes Do you agree that for the above service KM was paid service charges at a % of the OD premium? A: Yes Q: Do you agree that KM rendered the services mentioned in Schedule A of the agreement of the service provider agreement dated 15.11.2013? A: Yes, they provided Policy servicing and Data processing services. Q: Do you therefore agree that your answer to question no. 18, 19 20, 25 (questions by department while recording statement) are incorrect? A: Yes it is incorrect {four separate questions and answers are made into one here} Q : why were there such four incorrect replies? A: I was forced to give such answer. Q: In question no. 34, is the description in the invoices-data processing and policy servicing-absolutely false? A: No. They are providing data processing and policy related activities services. Q: Do you agree that you received from KM, Chennai Ford, Honda Cars India Ltd, SM etc, the service of promoting RS as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... witnesses. 16. Section 9D of the Central Excise Act, 1944 provides as to how the statements recorded during investigation can be admitted in evidence. The said Section has been adopted in Finance Act, 1994 as provided in Section 83 of the Finance Act, 1994. The Hon ble High Court of Punjab and Haryana in the case of G-Tech Industries Vs Union of India 2016 (339) ELT 209 (P H) had occasion to consider the compliance of the provisions of Section 9D of the Central excise Act, 1944. It was held that the statements recorded during an inquiry or investigation cannot be merely accepted in evidence. For admitting such statements summons has to be issued to the witness and examined. The witness can be cross examined by the assessee. The relevant para reads as under: 16 . Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a Gazetted Central Excise officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n passed in blatant violation of the mandatory procedure prescribed by Section 9D of the Act, it has to be held that said Orders-in-Original stand vitiated thereby. 17. The Hon ble Jurisdictional High Court in the case of Sri Bala Ganeshan Spinners - 2021 (377) ELT 510 (Mad.) has emphasised the requirement of cross examination. The Tribunal in the case of Swift Institutes of Engineering Technology Vs Commissioner - 2020 (34) GSTL 502 (Tri-Chand) had occasion to consider the applicability of Section 9D of Central Excise Act 1944, to the investigations conducted for short payment of service Tax. 18. During cross-examination the witnesses have categorically stated that the dealers provided services to the appellant in the nature of data processing and insurance related activities . The dealers have also collected charges from the appellant for such services along with service tax. In the SCN it is alleged that the cenvat credit is not eligible to the appellant as the description of services in the invoices is incorrect. At times, in the SCN as well as OIO it is alleged that the credit is inadmissible as no services at all were provided by the dealers to the appellants. For better appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er making available insurance Services to customers in terms of this MOU: CONSIDERATION In consideration of the services provided in pursuance of this Agreement Insurer agrees to pay a) HCIL, a fee, mutually agreed for utilization of the IT support established; maintained and provided by HCIL that would be available to the Insurer for its providing the Insurance Services. b) Dealerships a fee/service charge for utilization the infrastructure provided by Dealers at Dealerships. c) The nominated Brokers such reasonable brokerage (subject to IRDA norms) for the brokerage services to be provided by them. The rates of the fee or charges may be mutually agreed upon from time to time in writing. 21. Similar agreements have been entered with M/s. Tata Motors, M/s. Ford etc. From such agreements it can be seen that the dealers have provided services to the appellant. Further, the transactions are not hidden or suppressed in any manner. The department alleges these are illegal and in contravention of Insurance Act and IRDA Regulations. The guide lines on outsourcing of activities by Insurance companies issued by IRDA produced by the appellant shows that the non-core activities and activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 30-1-2017, the crux of the allegations of the Department has been recorded by the Original Authority, as under : 31. On careful consideration of the statements of personnel of M/s. Chola and Dealers, I find that (i) The payment made by M/s. Chola to M/s. Hyundai/Dealers of Motor Vehicles is only a percentage of OD premium collected and the said payout details are calculated by the Head Office of M/s. Chola and communicated to the Dealers; (ii) M/s. Chola could not term such payout as commission (which would be in violation of IRDA guidelines) and hence the Dealers were given prescribed format to raise invoices as if they provided computing network connectivity through extranet, internet space, furniture and fixtures, consumables, salary of staff, computers, printers, electronics and electricity ; (iii) the Dealers accordingly raised invoices on the insurance companies in the format provided to them and (iv) the Dealers have not provided the services as mentioned in the description of the invoices. In other words, the description of the services contained in the invoices used for availing Cenvat Credit do not reflect the true description of the services. 6.2 From the above, it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessment at the dealer s end. .. .. 8.1 A similar issue came up for consideration in the case of M/s. Modular Auto Ltd. (supra). The substantial questions of law considered in the above case are as under : 2. The above appeals are admitted on the following substantial questions of law; (a) When the service provider was not before the Tribunal, whether the Tribunal can go into the question as to whether the said service provider had provided service to the appellant or not, more so when the said service provider has been assessed to service tax under Business Support Service for the service rendered by them to the appellant. (b) Is the Tribunal not in error in refusing credit to the appellant for service tax paid by them to service provider when payment of service tax by the appellant for the service rendered by service provider is not in dispute and that it is settled, the assessment to tax at the hands of the service provider end cannot be questioned in the hand of service receiver (appellant in this case)? .. .. 10 . From the foregoing, after appreciation of the facts and following the decision of the Hon ble High Court in M/s. Modular Auto Ltd. (supra), we hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintained by dealer mentions the description of service tax as additional incentives whereas the invoice with the same serial number maintained by the assessee has the description as data processing and policy related services . Again, it is not disputed that the tax has been paid as per the invoices. Appellant who is the service recipient cannot be found fault for the description mentioned in the invoice maintained by the service provider. Appellant has no control over the accounts maintained by the service provider (dealer). The credit at the recipient s end cannot be denied for this reason. We hold that the denial of credit on this reason is not justified. 29. Appeal No.ST/40198/2020 covers the period from April 2015 to June 2017. The facts and allegations are the same. Based on the very same investigation, the SOD dated 13.04.2018 has been issued proposing to deny the credit availed on the invoices issued by dealers, proposing to recover the amount along with interest and for imposing penalties. Interestingly, in para 13.2 it is held by the adjudicating authority that the commission charges paid by appellant to the dealers will be liable to service tax under Reverse Charge Mech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the specially devised scheme, at the cost of the ingenuous and hapless taxpayer. (iv) it may possibly be a violation of IRDA circular which is mentioned in the impugned order. Hence the issue deserves a deeper examination of facts and layered treatment of law, which I propose to explore before coming to a conclusion. Hence this separate order. 33. The brief facts of the case are that the appellant is engaged in the business of providing general insurance service pertaining to motor insurance, health insurance, property insurance, etc. They started the insurance business in the year 2001 and are registered with the Insurance Regulatory Development Authority of India (IRDAI). During the course of business, the appellant has entered into agreements with automobile manufacturer such as Ford India Private Ltd. (Ford), Tata Motors and others in terms of which the appellant and automobile manufacturer agreed to act in concert along with authorized dealers of the car to convenience car customers for the insurance coverage of cars. The appellant entered into a tripartite agreement on 24.2.2008 with the car manufacturer, M/s. Tata Motors Limited (TML) and service provider, M/s. Tata Busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Enter the data in the application form with receipt details in an agreed application and general control sheets. e. Forwarding the data to the company. II Policy Servicing: a. Printing of policy pack as per the Standards and Instructions of the Company b. Ship the policy pack to the insured c. In case of the returned policy, keep record of the details of the customer and send the details to the company d. Prepare detailed MIS as required by the company in the format provided by the Company e. Carry out data entry for the service request received from the customer for the policies processed by service provider f. Handle the refund request of the customer and forward the same to the company for refund g. Handle the request received from the customer for duplicate policy issuance for the policy processed by the service provider h. Collection of documents from the customer for complying with AML KYC norms i. Printing and posting of reminders for short collections, info pending etc. j. Assisting in the claims documentation and investigation processes III Pre-Inspection (Motor Vehicle) a. Doing the inspection of the vehicle for motor proposals, wherever necessary, at the request of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars India Limited and TV Sundaram Motors (Dealer) and which was reversed by them to the tune of Rs. 69,35,403/- and Rs. 1,72,63,912/- respectively was demanded and confirmed. Hence in the impugned order, it has been held that the appellant has availed ineligible CENVAT credit of Rs. 62,31,23,972/- (Rs. 59,89,24,657/- + Rs. 69,35,403/- + Rs. 1,72,63,912/-), which has been demanded with interest and penalty imposed. The period covered is from 2010-11 to 2014-15. The learned Commissioner has divided the demand for irregular CENVAT credit, into three parts as under. Irregular availment of CENVAT credit; A. on the basis of invoices issued by automobile dealers (excluding automobile dealer viz. M/s. TVS Sundaram Motors) Automobile Manufacturers (excluding automobile manufacturer, Viz. M/s. Honda Cards India Ltd.) B. on the basis of invoices issued by the automobile manufacturer viz. Honda Cards India Ltd. and C. on the basis of invoices issued by the automobile dealer, viz. M/s. TVS Sundaram Motors. 35. Aggrieved by the impugned order the appellant has assailed the same before us in appeal. Since the written and oral submissions made by the rival parties and their representatives have al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Penalty under section 78 of the Finance Act, 1994 read with Rule 15 of Credit Rules is not attracted in the present case 108 20. No interest payable 109 21. Summary of findings 110 I now intend to examine the issues as listed above. 36. At the outset, the appellant submits that the Show Cause Notice is vague and based on incorrect principles of law. Therefore, the impugned Show Cause Notice itself is liable to be dropped. 36.1 The appellant is of the view that the department in the impugned order has wrongly denied the availment and utilization of CENVAT credit by the appellant on invoices given by dealers of cars. While the order at places states that no services have been received by the appellant, in other places, it emphasizes that services received by the appellant are not what have been described in the invoices. It does not discuss how the department has the authority to collect and retain the service tax that has been discharged by the dealers on such transactions if no services were indeed provided. Further, the denial is on the basis of invoices raised by the dealers. The impugned order fails to understand the basic transaction that the appellant has entered into, hence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the tax law i.e. the subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. If there is any ambiguity regarding any of these ingredients in a taxation statute then there is no tax in law. . . . . Again in Suresh Kumar Sharma Vs. Union of India [2007 5 STR 254 (Kar)] the Hon ble High Court held as under; . . .There are three components of a taxing statute viz., subject of the tax, person liable to pay the tax and the rate at which the tax is levied. If there is any real ambiguity in respect of any of these components which is not removable by reasonable construction, there would be no tax in law till the defect is removed by the statute. There are three stages in the imposition of tax namely (1) declaration of liability in respect of persons or property, (2) assessment of tax that quantifies the sum which the person liable has to pay, and (3) methods of recovery if the person taxed does not voluntarily pay. The taxing statute has to be strictly construed.. . (emphasis added) 37.3 Service tax was introduced through Chapter V of the Finance Bill, 1994 during the presentation of the Union budget and implemented as an Act from 01/07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to May 01, 2006) or after its amendment, with effect from, May 01, 2006. . . (emphasis added) Hence there was a clear mandate in section 67 that the value of taxable services for charging service tax has to be in consonance with Section 66 which levies a tax only on the taxable service and nothing else. As a result of this inbuilt check mechanism, only taxable service and not any service were subjected to levy under the provisions of section 67, prior to changes made in the statute effective from 01/07/2012. While the authority for levy of service tax on specified services from 01/07/1994 was contained in Section 66 of the Finance Act, 1994, with effect from 01.07.2012, the authority for levy of service tax was contained in Section 66B of the Finance Act, 1994. The section stipulated a rate of 14 per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in any as may be prescribed. As per Section 66BA, reference to section 66 was to be construed as reference to section 66B. It still required that an activity should be performed and not be in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed is not relevant, but the provision of service is the determinative factor 38.1 The appellant submits that according to them they have received the services as mentioned in the contract. However, even if the contention of the department was to be accepted, that the description of services mentioned in the invoices is incorrect, it would be an error on part of the department to hold that no services have been provided at all. Nomenclature mentioned in the invoices, or even at accounting stage does not take away the substance of provision of the service itself. It is a settled principle of law that the substance of the transaction has to be seen in order to tax the same. The nomenclature alone would not determine the nature of transaction. 38.2 This submission of the appellant encapsulates the whole dispute. Both parties to the dispute hold the same view on the principle of law involved, but apply it to their perception of events, arriving at different results. It is the answer to this riddle which will resolve this dispute and which I have set out to discover by the end of these discussions. 39. Without prejudice to the above submission, if the contention of the department is to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the appellant having sought clarity, it is further stated that any tax collected, retained or not refunded by the department in accordance with the provisions of a statute must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Hence any excess money collected as tax and paid to government is seen to have been retained under the authority of law. The issue has been dealt with in the landmark nine Judge verdict of the Hon ble Supreme Court in Mafatlal industries Ltd Vs Union of India [1997 (89) E.L.T. 247 (S.C.)] decided by a majority of 8:1. The relevant portion is reproduced below; 99. . . . The said enactments including Section 11B of Central Excises and Salt Act and Section 27 of the Customs Act do constitute law within the meaning of Article 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. . . (emphasis added) Further the Apex Court in Union of India Ors. Vs VKC Footsteps India Pvt Ltd. [Civil Appeal No 4810 of 2021] dated: 13/09/2021 stated; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1944 (CEA 1944). The Apex Court in its judgment in Mafatlal Industries (supra) has declared the law on the subject. Relevant portion is extracted below; 68. . . . To repeat - and it is necessary to do so - so long as Section 11B is constitutionally valid, it has to be followed and given effect to. We can see no reason on which the constitutionality of the said provision - or a similar provision - can be doubted. It must also be remembered that Central Excises and Salt Act is a special enactment creating new and special obligations and rights, which at the same time prescribes the procedure for levy, assessment, collection, refund and all other incidental and ancillary provisions. As pointed out in the Statement of Objects and Reasons appended to the Bill which became the Act, the Act along with the Rules was intended to form a complete central excise code . The idea was to consolidate in a single enactment all the laws relating to central duties of excise . The Act is a self-contained enactment. It contains provisions for collecting the taxes which are due according to law but have not been collected and also for refunding the taxes which have been collected contrary to law, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in kind is being considered as value of taxable service under section 67 of the Finance Act, 1994. Hence, the impugned notice is liable to dropped on this ground. 40.2 I agree with the principle stated by the appellant on this issue. The predicament with labels is that they tend to discourage the examination of facts at the very threshold. Hence, I too agree that just because the dealers label the payment in the invoice as being for Data Processing and Policy Servicing and related activities it will not become representative of its true character. A principle of interpretation of an activity, is that the nomenclature assigned to it is not decisive of its nature. The fact that the payments made by the appellant to the dealer is calculated in sync with the quantum of business procured by the dealers cannot be the lone determinative factor that the amount paid to the dealers is merely a payout / commission. One has to look at the activity performed, the belief, knowledge and intention of the parties signing the agreement. One can also examine the commensurate nature of the payments made for the service involved etc especially in the case of suspect agreements. It should satisfy t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he personnel of the Branch / Head Office of the appellant; that personnel of Branch / Head Office of RSAICL had issued instructions through their official email id s to prepare invoices in the formats devised by them to be issued by the car dealers to claim the payouts etc. The adjudicating authority had not felt the need for summoning the officers of DGCEI who recorded the statements as no clarification was to be obtained from the DGCEI officers in view of the fact that all the witnesses replied during cross-examination that no retractions were made by them. The contention of the appellant is that during the cross-examination of various persons, it was clearly admitted by all the dealers that they were providing the services of data processing and policy servicing to the appellant that during examination Shri B. Balaji stated in answer to Question No. 5 that he was forced to give the statement; that in his cross-examination Shri Venkatachalam Sekar stated in answer to Question No. 9 that he was forced to give the reply; that that in such circumstances, the statement given by the said persons loses its relevancy and evidentiary value. With regard to Shri B. Balaji s assertion in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned above were put forth and replied based on documents available on record and contained a wealth of facts, for which the officer cannot exert any pressure or force any one to explain the contents of. During the cross-examination of witness namely Shri Balaji, the genuineness of the documents was not questioned and the appellant in the instant appeal filed also have not disputed the veracity of the documents. Shri Balaji had all the time to explain to the AA, the necessity for M/s. TVS Sundaram Motors to raise two sets of invoices / bills for the same amount and for the same month calculated as a % of OD premium. As Shri Balaji had failed to clarify his explanation for query No. 5 even during cross-examination by the AA and thus stating that the answer to the query was taken by force does not hold water and it is an afterthought. Secondly, the appellant s contention is that the statement from Shri Venkatachalam Sekar, Financial Controller of RSAICL in respect of Question No. 18, 19, 20 and 25 was taken by force in his statement recorded by DGCEI. For ease of understanding, all the 4 queries and answers are reproduced below- Q.18 The email dated 12.615 encloses the proforma invoic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 30.4.2015 issued by M/s. Chennai Auto Agencies Pvt. Ltd. (also called as Chennai Ford) 423, Ponnamallee High Road, Chennai (ST Regn. No. AAACC4158LST003). According to the invoice, they have provided Data Processing and Policy Servicing and related activities for the month of April 2015 and you have paid Rs. 1,99,443/- as the service charge and Rs. 24,651/- as service tax. Please answer the following questions relating to each service mentioned in the invoice. a) What are the Data Processing and Policy servicing and related activities provided by Chennai Auto Agencies P Ltd. to you? b) Who uses these Data Processing and Policy servicing services? Please provide name, address and contact no. of your employee / manpower who have been using the services to provided? c) Have you taken CENVAT credit on this invoice? Ans . Having seen the above-mentioned invoices, I had appended my signature in it. RSAICL has received the above-mentioned invoices from Chennai Ford. The particulars mentioned in the invoices as Data Processing, Policy servicing and related activities are towards insurance payouts that RSAICL had paid to the dealers which are actually a percentage fixed on the OD premiu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and rights, which at the same time prescribes the procedure for levy, assessment, collection, refund, investigation and all other incidental and ancillary provisions. To avoid repetition certain sections of the Central Excise Act 1944 (CEA 1944), has been made applicable in relation to service tax as they apply in relation to a duty of Central Excise. These are found in section 83 of the Finance Act, 1944 (FA 1944). One such section made applicable is section 14 of the CEA 1944, which is reproduced below. 14. Power to summon persons to give evidence and produce documents in inquiries under this Act. (1) Any Central Excise Officer duly empowered by the Central Government in this behalf shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making for any of the purposes of this Act. A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned. (2) All persons so summo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be established: (a) that the confession has been made by an accused, person to a person in authority; (b) that it must appear to the Court that the confession, has been obtained by reason of any inducement, threat or promise proceeding from a person in authority; (c) that the inducement, threat or promise must have reference to the charge against the accused person; and (d) the inducement, threat or promise, must, in the opinion of the Court, be such that the accused in making the confession believed or supposed that by making it he would pin any advantage or avoid any evil of temporal nature in reference to the proceedings against him. It is noted that in this case the statements by the officials are not by accused persons nor against themselves but only explain the functioning of the appellants company in a certain context. Further neither the officials nor the appellants counsel during the cross examination or otherwise till the issue of the impugned order or before us, have been able to establish that the actions of the investigative officers attract the provisions mentioned in the section above. 41.6 A question arises as to how much weightage can be given to these replies re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an opportunity lost by the appellant. Factual proof of the activity / service rendered as per the agreement could have been presented by the officials being examined by the appellant s counsel. In fact, apart from making a reference to the agreement with dealers or stray words or sentences in the impugned order, the appellant in the present case has shown remarkable shyness in showing physical / documentary proof that would demonstrate that the activity in the agreements with dealers were actually performed. The stand of the learned AA hence cannot be faulted in accepting the legally valid statements after rejecting the claim of threat / duress by the officials and satisfying himself of their evidentiary value in understanding the issue and deciding the matter. The appellant has further contended that the statements would not automatically be binding and reliable until the procedure prescribed under section 9D of the Central Excise Act 1944 is satisfied as held by the Hon ble High Court in G-Tech Industries Vs Union of India [2016 (339) E.L.T. 209 (P H)]. It would hence be appropriate to reproduce the said provision: 9D. Relevancy of statements under certain circumstances.- (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement [2013 (289) ELT (3) SC], as under; 18. . . . It is only when a deposition goes through the fire of cross-examination that a Court or Statutory Authority may be able to determine and assess its probative value. Using a deposition that is not so tested, may therefore amount to using evidence, which the party concerned has had no opportunity to question. Such refusal may in turn amount to violation of the rule of a fair hearing and opportunity implicit in any adjudicatory process, affecting the right of the citizen. The question, however, is whether failure to permit the party to cross examine has resulted in any prejudice so as to call for reversal of the orders and a de novo enquiry into the matter. The answer to that question would depend upon the facts and circumstances of each case. For instance, a similar plea raised in Surjeet Singh Chhabra v. Union of India and Ors. (1997) 1 SCC 508 before this Court did not cut much ice, as this Court felt that cross examination of the witness would make no material difference in the facts and circumstances of that case. The Court observed 3. It is true that the petitioner had confessed that he purchased the gold and had brought it. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be of the authority passing the order. If the satisfaction recorded by the authority is objective and is based on the material on record then the courts would not interfere with the order passed by the authority only because another view possibly can be taken. Such satisfaction of the authority can be interfered with only if the satisfaction recorded is either demonstratively perverse based on no evidence, misreading of evidence or which a reasonable person could not form or that the person concerned was not given due opportunity resulting in prejudicing his rights under the Act. The statements which clarified/ explained the information contained in documents from the personal knowledge of official dealing with it, cannot be said to be perverse or not based on evidence. Voluntary statements, if clearly proved and found acceptable are the most effective proofs of law and can t be ignored. The legal issue of the admissibility of the statements in evidence is hence found valid. 41.8 I next propose to discuss whether these statements support the stand of Revenue or not. 41.9 The main charges against the appellant regarding taking ineligible CENVAT credit is set out at para 34 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point out some stray words or sentences in the impugned order. The activity to be performed remained on paper in the form of an agreement but was not acted upon by the dealers at the behest and with the knowledge of the recipient of the activity which is the appellant. It was mentioned in the impugned order that car dealers have admitted raising invoices towards charges of data processing and policy servicing and related activities as required of them by the confidential email communication received by them from the appellant. The amount of payout was decided by the insurance company i.e appellant. No representative from the insurance company assisted the dealers and no separate expenses is specifically incurred on behalf of the appellant or any other preferred insurance company. They do not provide any space to the employees of any insurance company and they have not rented any portion of the premises to the insurance companies, insurance agents, brokers / intermediaries for providing them in infrastructure, manpower etc. The amounts received from the appellant are fixed as a percentage on the basis of the premium amount booked for the insurance policies for new vehicles and for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elling a car and get the insurance policy printed in their showroom itself and give it to the customers at the time of delivering the car or other motor vehicles, that the infra company gives them the details of the premium collected from each dealer which then reconciled with the payment deposited by each dealer in their account, that thereafter they make payment of payouts to the car dealers accordingly and the infra-company gets a service charge at rate as negotiated with them, however, the amount paid is accounted as Payouts in their Books of Accounts and that the present rates of service charge to infra companies are: TBSS-TATA 4% of OD Premium HCIL 2% of OD Premium TBSS-Ford 1.75% of OD Premium TBSS-Renault 1.75% of OD Premium The deposition made shows very clearly that whatever support which are needed for issuance of insurance policies are not provided by the car dealers but by the Infra-company for which they are paid a very small percentage of the OD Premium but with an intention to suppress this fact M/s RSAICL has shown this charge as Payouts in their Books of Account. Shri Venkatachalam Sekar has further admitted that they have no option but to pay the payouts to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the method of calculating the consideration is wholly irrelevant to decide the nature of services provided by the appellant. When examined in totality the payments do not satisfy the test of what a reasonable person of ordinary prudence would do while hiring services. They signify something more. 41.14 Third, the statements of senior officials of the appellant company, which was again based on a Question and Answer format, reveal that some of the questions which were asked by the departmental officers were, a request to provide documents like agreement and as to what type of services were rendered by the appellant towards data processing and policy servicing and related activities? What was the documentary evidence in support of their claim? How is the amount calculated towards cost? What was the expenses incurred by the appellant with regard to data processing and policy servicing and related activities and whether it is specified under any agreement? How are the charges arrived at for data processing and policy servicing and related activities? How many data processing and policy servicing and related activities have been made by the dealers? How the data processing charges raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whole fraudulent scheme. While the appellant paid the dealer, he got back the amount as input credit to be used for payment of duty on output service. No financial injury was caused to either the dealer or the appellant. They benefitted at the cost of the customer, who in reality was not expected by law to bear the final burden of a non-tax. 41.16 The entire story unravels through facts and documents which are connected and explained by the officials involved and hence lend credibility to the findings in the impugned order. 41.17 I find that with respect to SCN 30/2012-ST. the impugned order states that the service provided by the dealer is liable for payment of Service Tax under the Reverse Charge Mechanism. I find that this finding is not based on the charge made in the SCN and hence does not sustain. 42 Unless the assessment made by the jurisdictional officer of the dealer is revised, the credit at the recipient s end cannot be denied. 42.1 The appellant states that the dispute is regarding classification and hence CENVAT credit cannot be denied at the hands of the recipient-appellant. 42.2 From going through the facts in issue, I find that this is not a case of the department s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NVAT credit. . . . . . . . (5) The manufacturer of final products or the provider of output service shall maintain proper records for the receipt, disposal, consumption and inventory of the input and capital goods in which the relevant information regarding the value, duty paid, CENVAT credit taken and utilized, the person from whom the input or capital goods have been procured is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit. (emphasis added) The jurisdictional Hon ble High Court of Madras happened to examine the claim of credit by the recipient, under the GST laws, the principles of which are similar to the claim of CENVAT credit, in Pinstar Automotive India Private Limited v. Addl. Commissioner CGST CE, [W.P. No. 8493 of 2023]. The Hon ble Court held that in the case of non-payment of GST by supplier to the Government, the substantive liability falls on the supplier and the protective liability upon the purchaser. Relevant portion of the judgment is below; 10. An additional factor is that where the tax liability has been met by way of reversal of ITC and similarly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aler the opportunity of showing cause in writing against the imposition of such penalty. 9.1 Thus, the provisions of Section 70, quoted hereinabove, in its plain terms clearly stipulate that the burden of proving that the ITC claim is correct lies upon the purchasing dealer claiming such ITC. Burden of proof that the ITC claim is correct is squarely upon the assessee who has to discharge the said burden. Merely because the dealer claiming such ITC claims that he is a bona fide purchaser is not enough and sufficient. The burden of proving the correctness of ITC remains upon the dealer claiming such ITC. Such a burden of proof cannot get shifted on the revenue. Mere production of the invoices or the payment made by cheques is not enough and cannot be said to be discharging the burden of proof cast under section 70 of the KVAT Act, 2003. The dealer claiming ITC has to prove beyond doubt the actual transaction which can be proved by furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. The aforesaid information would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions by giving cogent reasons on the basis of the evidence and material on record. In some of the cases, the registration of the selling dealers have been cancelled or even the sale by the concerned dealers has been disputed and/or denied by the concerned dealer. In none of the cases, the concerned purchasing dealers have produced any further supporting material, such as, furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. and therefore it can be said that the concerned purchasing dealers failed to discharge the burden cast upon them under Section 70 of the KVAT Act, 2003. At the cost of repetition, it is observed and held that unless and until the purchasing dealer discharges the burden cast under Section 70 of the KVAT Act, 2003 and proves the genuineness of the transaction/purchase and sale by producing the aforesaid materials, such purchasing dealer shall not be entitled to Input Tax Credit. 12. Despite the findings of fact recorded by the Assessing Officer on the genuineness of the transactions, while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer has actually been deposited by the selling dealer with the Government or has been lawfully adjusted against output tax liability and correctly reflected in the return filed for the respective tax period. The burden of proof as per Section 70 of the KVAT Act, 2003 was not an issue before the Delhi High Court. How and when the burden of proof can be said to have been discharged to prove the genuineness of the transactions was not the issue before the Delhi High Court. As observed hereinabove, while claiming ITC as per section 70 of the KVAT Act, 2003, the purchasing dealer has to prove the genuineness of the transaction and as per section 70 of the KVAT Act, 2003, the burden is upon the purchasing dealer to prove the same while claiming ITC. 15. In view of the above and for the reasons stated above and in absence of any further cogent material like furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. and the actual physical movement of the goods by producing the cogent materials, the Assessing Officer was abso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot disputing the fact of providing the service as described in the invoice or remittance of duty on the same. 43.2 This averment of the appellant is not correct. The SCN does not disclose that no action has been taken against the car dealers. The appellant s claim is hence not substantiated and is not a part of the dispute in this case. Moreover, the present case has been made by officers of DGCEI and not by the Commissionerate. The action taken by Division officers who are doing the normal assessment functions are not know and are a separate cause of action. No inference can be drawn on the bald statement made by the appellant. The action in this case is appellant specific based on Rule 9 of CCR 2004. Moreover, in Basawaraj Anr. vs Special Land Acquisition Officer [(2013) 14 SCC 81] , the Apex Court ruled that: 8. It is a settled legal proposition that Article 14 of the Constitution is not meant to perpetuate illegality or fraud, even by extending the wrong decisions made in other cases. The said provision does not envisage negative equality but has only a positive aspect. Thus, if some other similarly situated persons have been granted some relief/benefit inadvertently or by mist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n letter in spirit by the parties concerned. Illegality cannot get the cover of an agreement/ contract and succeed. Further no taxable activity was performed by the dealers as described in the invoice, as discussed above, hence the question of eligibility for the mis-declared invoice to qualify as an input service-related document does not arise. The matter has been discussed elaborately at para 37 above. To put it briefly in Intercontinental Consultants and Technocrats Private Limited (supra), the Hon ble Apex court held that as per section 67 of the FA 1994 service tax is with reference to the value of service. As a necessary corollary, it is the value of the services which are actually rendered the value whereof is to be ascertained for the purpose of calculating the service tax payable thereupon. Any other amount which is calculated not for providing such taxable service, in this case the service as declared in the invoice, cannot be a part of that valuation as that amount is not calculated for providing such taxable service . The issue is not merely technical as stated by the appellant, but goes to the heart of the law of taxation. 45. The issue is no longer res integra and st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is neither desirable nor permissible to pick out a word or a sentence from a judgment divorced from the context of the question under consideration and treat it to be complete law. 45.2 In the Modular Auto Ltd (supra) the Hon ble High Court examined the following questions of law; a) When the service provider was not before the Tribunal, whether the Tribunal can go into the question as to whether the said service provider had provided service to the appellant or not, more so when the said service provider has been assessed to service tax under Business Support Service for the service rendered by them to the appellant. b) Is the Tribunal not in error in refusing credit to the appellant for service tax paid by them to service provider when payment of service tax by the appellant for the service rendered by service provider is not in dispute and that it is settled, the assessment to tax at the hands of the service provider end cannot be questioned in the hand of service receiver (appellant in this case) (emphasis added) The matter examined by the Hon ble High Court relates to a question where the payment of service tax by the appellant for the service rendered by service provider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The matter has been discussed at para 45. In Nahar Granites (supra), the Hon ble High Court dealt with an issue pertaining to a case where the department did not dispute the classification by the manufacturer and accepted the declaration and duty. It was held that CENVAT credit cannot be denied to the purchaser who otherwise fulfill all conditions. In the instant case the issue s include the dispute regarding the taxability of a service and that the appellant did not discharge the burden of proof that all the conditions required for taking CENVAT credit have been fulfilled. In Karur Vysya Bank (supra) again a coordinate Bench of this Tribunal examined an issue where the appellant was providing services such as supply of infrastructure like, table, chair, network, electricity, telephone etc. to an insurance company. It s the appellants averment that in this case the department themselves had demanded service tax under Business Support Services on infrastructure support services provided to insurance companies and the same was upheld by this Hon ble Tribunal. That being the case, there is no merit in stating that the no services, as described in the dealer s invoices, have been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e based on facts, documents and statements in a proper manner and the allegations were found to sustain as discussed elaborately above. In M/s Cholamandalam (supra) a Coordinate Bench of this Tribunal examined the issue was that credit was availed by an Insurance Co. on the basis of invoices issued by the dealers of motor vehicles containing description of service which was allegedly never provided by them. Since the appellant has placed great stress on the said judgment, paras 6.2 to 7.3 which is important to understand the basis of the decision is reproduced below; 6.2 From the above, it can be seen that the case of the Department is that the payout paid by the appellant to the dealers on the OD premium collected by the dealers from the customers is camouflaged as service provided by the dealers to the appellant; that therefore, the services contained in the invoices have actually not been provided by the dealers to the appellant and thus, CENVAT Credit is not eligible. 7.1 Though in the Show Cause Notice the main allegation is that the description of services in the documents on which credit has been availed is not correct, at the time of adjudication, the main finding is that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was concluded that as per Section 73A(2) of the Finance Act, 1994, even if tax is not liable to be collected from a person, if collected, the collected amount has to be paid to the credit of the government. In this case, it does not mean that department has accepted the taxpayer s assessment and that the actions of the taxpayer have been ratified. Further taking guidance from the Hon ble Apex Courts judgment in Mafatlal Industries (supra) that it is for the person who is aggrieved to initiate the process of refund in terms of Section 11B, if he feels that he has paid tax not due and it s not for the department to so suo-moto refund the same. A refund can only be processed when an applicant for refund sets out the context of his claim satisfying the requirements of law, which is then examined and found eligible by the department. I find that neither Section 73A(2) of the Finance Act, 1994 nor the Apex Courts decision in Mafatlal Industries was brought to the notice of the Hon ble Tribunal. Similarly, neither was Rule 9(5) of the CCR, 2004 or the Apex Courts judgment in M/s Ecom Gill Coffee Trading (supra) brought up for discussion and consideration by the contesting parties before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. 11. The following words of Lord Denning in the matter of applying precedents have become locus classicus : Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive. * * * * * * * * * Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it. 12. This aspect has been highlighted in Collector of Central Excise, Calcutta v. M/s. Alnoori Tobacco Products and Anr. [Civil Appeal Nos. 4502-4503 of 1998 decided on 21-7-2004]. 46. Availment of CENVAT c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tifying Authority in India. 2. (i) Every assessee proposing to use digital signatures shall intimate the following details to the jurisdictional Deputy Commissioner or Assistant Commissioner of Central Excise, at least fifteen days in advance:- a) name, e-mail id, office address and designation of the person authorised to use the digital signature certificate; b) name of the Certifying Authority; c) date of issue of digital certificate and validity of the digital signature with a copy of the certificate issued by the Certifying Authority along with the complete address of the said Authority: Provided that in case of any change in the details submitted to the jurisdictional Deputy Commissioner or Assistant Commissioner, complete details shall be submitted afresh within fifteen days of such change. (ii) Every assessee already using digital signature shall intimate to the jurisdictional Deputy Commissioner or Assistant Commissioner of Central Excise the above details within fifteen days of issue of this notification. 3. Every assessee who opts to maintain records in electronic form and who has more than one factory or service tax registration shall maintain separate electronic records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the government treasury is allowed to be bled in this manner, the statute would be seen not to have been followed sufficiently by the officers so as to carry out the intent for which FA 1994 was enacted. This cannot thus merely be a procedural matter. Apart from the field of taxation, government has introduced facilities like the online platform TReDS (Trade Receivables Discounting System) that facilitate the financing of invoices of vendors drawn on big organizations and other corporates, including Public Sector Undertakings (PSUs) and Government Departments, by discounting the invoices through financiers. These two activities itself reveal the importance and value of an invoice. In daily life no person, including the appellant, would be prepared to freely allow the bank to encash a cheque even for a paltry amount, bearing the company s name if it is not signed by an authorized representative. There is no reason why government finances and tax payment should be handled differently and in a cavalier manner. A signature placed on an invoice physically or digitally inculcates faith in the document and gives it credibility and value in matters of taxation, business operations and day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No CENVAT credit under sub-rule (1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document: Provided that if the said document does not contain all the particulars but contains the details of duty or service tax payable, description of the goods or taxable service, assessable value, Central Excise or Service tax registration number of the person issuing the invoice, as the case may be, name and address of the factory or warehouse or premises of first or second stage dealers or provider of output service, and the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, is satisfied that the goods or services covered by the said document have been received and accounted for in the books of the account of the receiver, he may allow the CENVAT credit. (emphasis added) It is necessary to examine every word of a statute in its context, more so considering the instant liquidity given by the said document when taken into the books of account. A easy facility far removed from the rigors and checks involved in getting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional officer would not be aware that the appellant was taking credit on electronic documents and such a modus operandi could be unearthed only after a search of the office by the officers. Even otherwise if this pernicious practice is accepted it will allow all assesses to take credit on incomplete documents and when found out seek the benefit of proviso to Rule 9(2) of CCR 1994. A situation not envisaged by the Rules. Proviso to a Rule cannot become the Rule. In the instant case the position becomes even more adverse as the appellant has been found indulging in blame worthy conduct. 46.5 Further it is observed that Notification No. 18/2015-Central Excise (N.T.), Dated 01/07/2015 while specifying the safeguards and procedures for issue of digital invoices lays out more stringent conditions, like use of only Class 2 or Class 3 Digital Signature Certificate duly issued by the Certifying Authority in India, preservation of appropriate back up of records in electronic form for a period of 5 years, document modification history, access to key information from the signature panel and acceptance of signer post verification of necessary particulars etc. Hence the appellants plea that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions that are not genuine. Having found the credit irregular as a part of the full-scale investigation done by DGCEI and examined by the AA, the decision cannot be faulted. 48. The appellant humbly submits that the service tax department cannot act as a super-regulator and hold the appellant responsible for violation, if any, under other laws and regulations 48.1 The appellant submits that firstly, there has been no violation of IRDA principles. From the statements of the personnel of the dealers, the department has concluded that the payment made to the dealer by the appellant constitutes commission and therefore, since the appellant is in violation of the IRDA regulations in this regard, there is no separate service provided by the dealer, therefore, the credit of the same is not available to the appellant. The appellant submits that the service tax department cannot act as regulator for other laws in force. In the present case, the service tax has been discharged on the invoices raised by the dealers in this case. However, the violation of the IRDAI regulation, if any, cannot be a ground for denying the credit otherwise available to the appellant. Without prejudice, the illegali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Commission can only be given to the insurance dealers / brokers / intermediaries, who are duly approved by IRDA (or by insurance companies), that since the dealers are not the approved persons / agencies for selling the insurance polices and hence can t be officially allowed to sell the insurance policies, they cannot call such payouts as commission as it will be in violation of the IRDA guidelines. That the maximum commission fixed by IRDA is 10% of OD premium and the payout are far more, hence they cannot bill the amount as commission. That the car dealers are not authorized to sell the car insurance policies according to IRDA however there is no separate sale of insurance policies to car customers because it is automatically sold with the sale of the new car as price of insurance is inbuilt in the on road price of the car. This statement was recorded while the official was confronted with documentary evidence and cannot be ignored. 48.4 Any person, let alone an officer of the tax department, aware of the commission of an offence or intention thereof, including an economic offence, is duty bound to give information to the authorities concerned. I find that the allegations made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereas the period involved in the present case is from 2010 to 2015. Therefore, the majority of the demand in the present Show Cause Notice is beyond the normal period of limitation. The extended period of limitation for raising a demand is not invocable as there was no suppression of facts much less with intent to evade payment of duty. The appellant was under bona fide belief that they are entitled to avail and utilize credit of service tax paid on various input services for the reasons mentioned in this reply. Hence, allegation of suppression of facts with intention to evade is erroneous. They have relied upon the judgments (i) Shreeraj Panmasala Pvt. Ltd. (supra) to state that when Revenue has not collaborated its allegations with sufficient reliable evidence, the allegations have no legs to stand on, in (ii) Continental Foundation Jt. Venture (supra) to state that the expression suppression has to be construed strictly. There cannot be suppression that is not willful, and (iii) Padmini Products Vs. Collector of Central Excise (supra), to state that fraud, collusion, willful mis-statement postulate a positive act and mere non observance of Rules etc. will amount to a failure un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettled that fraud vitiates all solemn acts. Any advantage obtained by practicing fraud is a nullity. Hence the extended period of time has been rightly invoked in this case. 50. Penalty under section 78 of the Finance Act, 1994 read with Rule 15 of Credit Rules is not attracted in the present case 50.1 The appellant is of the view that since they are eligible to avail CENVAT credit, and as the issue is technical in nature, no penalties can be imposed. 50.2 This averment has been contested by Revenue. Once it is found that the issue involves any one of the ingredients like fraud, collusion, suppression of facts etc with intention to evade payment of duty, penalty has to be imposed as has been correctly done in the impugned order. 50.3 The discussions above show that the appellant has wrongly and knowingly availed of CENVAT credit for which he was not eligible. It is a general principle of law that a person ought not to be able to profit from his or her own wrong. The use of legal instruments to subvert law was examined by the Hon ble Supreme Court in Suraj Lamp Industries Pvt. Ltd. vs. State of Haryana Anr., [(2012) 1 SCC 656]. The Hon ble Court in that case felt that whatever be th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -payment or short payment etc. of duty is by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of the Act or of Rules made thereunder with intent to evade payment of duty ; that is to say, it is intentional, deliberate and/or by deceitful means. Naturally, the cases falling in the two groups lead to different consequences and are dealt with differently. Section 11A, however allow the assessees in default in both kinds of cases to make amends, subject of course to certain terms and conditions. The cases where the non-payment or short payment etc. of duty is by reason of fraud collusion etc. are dealt with under sub-section (1A) of section 11A and the cases where the non-payment or short payment of duty is not intentional under sub-section (2B). 10. Sub-section (2B) of section 11A provides that the assessee in default may, before the notice issued under sub-section (1) is served on him, make payment of the unpaid duty on the basis of his own ascertainment or as ascertained by a Central Excise Officer and inform the Central Excise Officer in writing about the payment made by him and in that event he would not be gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd (C) above the SCN had rightly required the appellant to show cause as to why the credit availed should not be denied and on failure to do so the impugned has confirmed the demand. F) As per section 67 of the FA 1994 service tax is collected with reference to the value of service. As a necessary corollary, it is the value of the service which is actually rendered which is to be ascertained for the purpose of calculating the service tax payable thereupon. Any other amount which is calculated not for providing such taxable service, in this case the service as declared in the invoice, cannot be a part of that valuation as that amount is not calculated for providing such taxable service . G) As per Section 73A(2) of the FA, 1994, even if the tax is not liable to be collected from a person, if collected, the collected amount has to be paid to the credit of government. This does not mean that department has accepted the taxpayer s assessment and that the actions of the taxpayer have been ratified. H) Any tax collected, retained or not refunded by the department in accordance with the provisions of a statute must be held to be collected, retained or not refunded, as the case may be, und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... performed. In fact, they admitted that no service at all was performed. N) Appellants company officials have stated in legally admissible statements that they have no option but to pay the payouts to the car dealers due to their agreement with the car manufacturers and that there is no separate sale of insurance policies because it is automatically sold with the sale of the new car as the price of the insurance is in-built in the On Road Price of the car. O) It is relevant to note that the Service Charge paid to infra companies for their service is in the range of 1.75 to 4% of OD premium and the dealer, who cannot recall having provided any service activity as per the agreement, to the Insurance Company gets paid a percentage between 10 to 55 % on the OD premium amount for the insurance policies booked, allegedly for providing services . These cannot be held to be genuine consideration towards transactions for data processing and policy servicing . When examined in totality the payments do not satisfy the test of what a reasonable person of ordinary prudence would do while hiring services. They signify something more. P) What monies were received by the car dealers based on invoic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has met with legal traction in matters relating to Income Tax laws, where the illegal gains are to be taxed at the hands of those who financially gained from these actions. However, in the case of Indirect Taxes where the burden of tax rests on the final consumer, while those who perpetuate the illegality are beneficiaries of the illegal monies collected as tax - due to input credit schemes meant to neutralize the cascading effect of tax - needs to be tested against the legal principle that a person ought not to be able to profit from his or her own wrong. U) The entire scheme as unraveled by Revenue points to fraud, collusion, willful misstatement in the invoices at the behest of the appellant and suppression of facts by contravention of the Act and the Rules made thereunder with intention to evade payment of duty, using ineligible credit. The blame worthy act by the appellant is deliberate and with the intent to enrich themselves unjustly at the cost of the car customer who bears the ultimate incidence of the non-tax . The matter could not have been unraveled by supervisory checks of the jurisdictional Division / Range staff and without an in-depth investigation by departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X
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