Case Law Details

Case Name : Tata Aig Life Insurance Co Ltd Vs Commissioner Of Central Excise, Thane (CESTAT Mumbai)
Appeal Number : Appeal No. ST/278/2009
Date of Judgement/Order : 16/11/2011
Related Assessment Year :
Courts : All CESTAT (607) CESTAT Mumbai (126)

Brief facts arising for consideration of the case are that the appellant M/s Tata AIG Life Insurance Co. Ltd. are holders of service tax registration under the category of Insurance auxiliary services. The service rendered by insurance agents is covered under the category of insurance auxiliary services. However, the liability to pay service tax on such services is on the recipient of the services, which are the insurance companies who engage the agents as per the provisions of rule 2(1)(d)(iii) of the Service Tax Rules, 1994. It was observed that the appellant had utilised input service tax credit in respect of service tax on insurance auxiliary services. The department was of the view that since the appellant is only a recipient of the service and is not providing any output service, they cannot utilise any input service tax credit for payment of service tax on Insurance auxiliary service.

In the appellant’s own case in order dated 26.05.2008, this Tribunal has granted waiver from pre-deposit of dues adjudged from the previous period. Further, in respect of similar cases involving identical issues in the case of Birla Sun life Insurance Co. Ltd. and HDFC Standard Life Insurance Co. Ltd. (cited supra) this Tribunal has granted unconditional waiver from pre-deposit of dues adjudged. The Honourable High Court of Punjab & Haryana in the case of CCE vs. Nahar Industrial Enterprises Ltd., cited supra have also held in a similar case pertaining to GTA service that Cenvat Credit can be utilised for payment of service tax on GTA service by the recipient of such services. Thus, we are prima facie of the view that the appellant has made out a prima facie case in their favour for grant of waive of pre-deposit of the dues adjudged.

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH, MUMBAI
COURT NO.II

Application No. ST/S/1862/2009
Appeal No. ST/278/2009

ORDER NO. S/534/11/CSTB/C-I

Arising out of Order-in-Original No. 10/BR-06/ST/Th-I/2009 Dated: 27.8.2009
Passed by the Commissioner of Central Excise, Thane-I, Mumbai

Date of Decision: 16.11.2011

TATA AIG LIFE INSURANCE CO LTD

Vs

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COMMISSIONER OF CENTRAL EXCISE, THANE

ST – Appellant registered under the category of Insurance Auxiliary Services and paying Service Tax on behalf of insurance agents as deemed service provider – Cenvat Credit taken of such payments and utilised – Prima facie case in favour – Stay granted: CESTAT [ para 7 ]

Judgement

Per: P R Chandrasekharan:

1. This appeal and stay application are directed against the Order-in-Original no. 10/BR-06/ST/Th-I/2009 dated 27.08.2009 passed by Commissioner of Central Excise, Thane-I. The stay application is being taken up for consideration.

2. Brief facts arising for consideration of the case are that the appellant M/s Tata AIG Life Insurance Co. Ltd. are holders of service tax registration under the category of Insurance auxiliary services. The service rendered by insurance agents is covered under the category of insurance auxiliary services. However, the liability to pay service tax on such services is on the recipient of the services, which are the insurance companies who engage the agents as per the provisions of rule 2(1)(d)(iii) of the Service Tax Rules, 1994. It was observed that the appellant had utilised input service tax credit in respect of service tax on insurance auxiliary services. The department was of the view that since the appellant is only a recipient of the service and is not providing any output service, they cannot utilise any input service tax credit for payment of service tax on Insurance auxiliary service. Accordingly, a show-cause notice dated 12.10.2007 was issued to the appellant demanding recovery of Cenvat credit wrongly utilised amounting to Rs.5,44,65,756/- during the period from October 2006 to March 2007. The case was adjudicated and the service tax demand was confirmed under section 73 of the Finance Act, 1994 read with section 14 of the Cenvat Credit Rules, 2004, along with interest thereon under section 75 ibid and also imposing a penalty of Rs.10,000/- under rule 15 of the Cenvat Credit Rules, 2004. The appellant is before us against the impugned order.

3. The Ld. Counsel for the appellant submits that in their own case for the previous period, this Tribunal vide stay order no. S/225/08/C-II/CSTB dated 26.05.2008 have granted waiver of pre-deposit of the service tax demand in respect of Insurance Auxiliary Services and Management Consultancy Services, on the same ground and, therefore, in respect of present demands also stay should be granted. He also relied upon the stay order passed in case of Birla Sun life Insurance Co. Ltd. vs. Commissioner of Service Tax, Mumbai reported in 2008(12)STR 143(Tri-Mumbai) and Stay order no. S/292-293/08/CSTB/C-I dated 09.06.2008 in the case of HDFC Standard Life Insurance Co. Ltd. vs. CST, Mumbai, wherein stay has been granted in respect of demands on identical grounds.

3.1 The Ld. Counsel also relies on the judgement of the Honourable Punjab & Haryana High Court in the case of CCE vs. Nahar Industrial Enterprises Ltd. reported in, wherein the Honourable High Court held that when a person, who is not a actual service provider but discharges the service tax liability on the Taxable Services, under section 68(2) of the Finance Act, 1994, is a deemed service provider and is entitled to avail the Cenvat Credit on inputs/input services/capital goods for payment of GTA service tax, even if he is not using such inputs/input services/capital goods for providing taxable services by virtue of the deemed legal fiction.

4. The ld. Commissioner (AR) appearing for the Revenue on the other hand relies on the judgement of this Tribunal in the case of ITC Ltd. vs. CCE, reported in  wherein it was held that recipient of GTA service, who is not engaged in providing any taxable output service or manufacture of dutiable final product is not entitled to utilise Cenvat credit account for discharging service tax on GTA services. Legal fiction created under explanation to Rule 2(p) is applicable only to persons who do not provide any output service or manufactures any dutiable final product and not to persons who provide some taxable service/services and/or manufacture some dutiable final products. Such persons are liable to pay service tax only through cash and not entitled to utilise Cenvat credit account for which another legal fiction is required to be provided which is not available in Cenvat Credit Rules, 2004.

5. The ld. AR also relies on the judgement of this Tribunal in the case of Modipon Ltd. vs. CCE, Ghaziabad, reported in 2010(19)STR 217(Tri-Del) wherein a similar view (as in the case of ITC Ltd.) was held: therefore, the Ld. Commissioner(AR) prays putting the appellant to terms.

6. We have carefully considered the rival submissions.

7. We find that in the appellant’s own case in order dated 26.05.2008, this Tribunal has granted waiver from pre-deposit of dues adjudged from the previous period. Further, in respect of similar cases involving identical issues in the case of Birla Sun life Insurance Co. Ltd. and HDFC Standard Life Insurance Co. Ltd. (cited supra) this Tribunal has granted unconditional waiver from pre-deposit of dues adjudged. The Honourable High Court of Punjab & Haryana in the case of CCE vs. Nahar Industrial Enterprises Ltd., cited supra have also held in a similar case pertaining to GTA service that Cenvat Credit can be utilised for payment of service tax on GTA service by the recipient of such services. Thus, we are prima facie of the view that the appellant has made out a prima facie case in their favour for grant of waive of pre-deposit of the dues adjudged.

Accordingly, we grant unconditional waiver from pre-deposit of service tax demand confirmed, interest thereon and penalties adjudged against the appellant vide the impugned order and stay recovery thereof during the pendency of the appeal.

(Pronounced in Court on 16.11.2011)

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