National Insurance Co. Ltd. Vs Commissioner of Central Excise And Service Tax (CESTAT Bangalore)
The appellant, a public sector undertaking, was engaged in providing Insurance Auxiliary Services and employed various agents for soliciting business, on whose commissions Service Tax was paid. During an audit covering the period 2002-03 to 30.09.2006, it was noticed that the commission amounts reflected in the trial balance were higher than the commission values disclosed in the ST-3 returns. Based on this difference, the department alleged short payment of Service Tax amounting to ₹8,29,025 and Education Cess of ₹12,074. Additional show-cause notices were issued for the periods 01.10.2006 to 31.07.2009, 2006-07 to 2008-09, and for another registration covering 2001-02 to 2004-05 on the same grounds.
In response, the appellant did not dispute the taxability of the commission payments. Instead, it contended that the Service Tax corresponding to the disputed amounts had already been discharged by its offices at Kolkata and Delhi. According to the appellant, the show-cause notices were based solely on journal entries reflected in the trial balance, without considering that those entries were subsequently reversed when the relevant payments were attributable to other divisions or branches. The appellant argued that if a proper reconciliation of the journal vouchers and related accounting entries was undertaken, it would become evident that there was no overall short payment of Service Tax by the company.
