ST - The assessee is engaged in business of providing life insurance services and are also registered for Management Consultant Services, Insurance Auxiliary Services, Life Insurance Services, Sponsorship Services and Management of Investment under Unit Linked Insurance Services - Based on an intelligence that the assessee is engaged in under-valuation of taxable services as well as of Unauthorized Collection of Service Tax from their agents that the matter was investigated - There is a demand of amount recovered from Insurance Agents as Service Tax in terms of sub-section (2) of Section 73A of Finance Act for the period 2006-07 upto June, 2012 - Initially the service tax has been paid by service receiver and later it has been collected from service provider, it cannot be construed that it is the amount in excess of service tax chargeable and has been collected and therefore required to be deposited with the Government - What is the objective and purport of said provision is that any amount in excess of tax leviable is collected, the said amount should be deposited with Govt. and the excess amount would be dealt with by Govt. either being refunded to the person who bears the burden or being transferred to the consumer welfare Fund - The said inference is supported by ratio laid down by Supreme Court in Mafatlal Industries' case 2002-TIOL-54-SC-CX-CB and also is in conformity with the philosophy of taxation enshrined in Constitution of India at Art.265 which mandates that no tax shall be collected without authority of law - Similar issue has been adjudicated by Tribunal in case of HDFC Standard Life Insurance Company 2016-TIOL-2912-CESTAT-MUM wherein the facts were similar to the one in the present case and the Department also had raised demand of service tax recovered from the insurance agents - The Tribunal while setting aside the demand held that contribution partial or entire, to the tax liability in an agreement with the provider of service is not forbidden by law to the extent that the contributor has not ventured to avail credit of such contributions and there is no detriment to the public revenue - The contractual obligation to reimburse the tax paid by person designated to do so by law is, thus, not tax collected in any manner warranting recourse to Section 73A of Finance Act, 1994 - Thus, the impugned issue is no more res-integra - Resultantly, the demand under Section 73 A (2) confirmed qua the amount recovered from the agent as service tax is held not sustainable - The next issue is; no Service Tax is payable on 4% debit adjustment made by assessee - Department could not produce any evidence to show that there was any amount which the insurance agents were suppose to pay back to the assessee and it is said amount which has been set out by assessee against the commission paid to insurance agent - In absence of any such evidence, the 4% debit adjustments from the commission as was paid to the insurance agent is nothing different than the discount as apparent from the agreed terms with such agents - The emphasis of adjudicating authority upon rule 3 of Valuation Rules while confirming this demand is also opined erroneous, because Rule 3 (a) of Service Tax Rules is applicable only in the cases where the taxable value is not ascertainable - However, in the present case, the value is ascertainable - The order is, therefore, held to be bad while confirming demand under this head as well - Finally coming to the argument about the entitlement of Department to invoke the extended period of limitation, it is observed and held that apparently and admittedly the assessee was regularly filing its service tax returns - It cannot be held that assessee indulged in suppression of facts or had made any willful misstatement as is alleged by Department - It rather stands clarified that the issue, as has been alleged as the violation on the part of assessee, was in the knowledge of Department since the year 2008 - The Department cannot invoke the extended period of limitation - As a result, the order in hand is set aside: CESTAT

- Appeal allowed: DELHI CESTAT

CX - CBEC has clarified that after forging if the processes of (a) Removal of runner and risers, (b) Surface cleaning and removal of surface defects, (c) Chippings of runner grinding to remove excess material, (d) Annealing an stress reliving, (e) Proof machining and (f) Surface coating are carried out, the item remains classifiable under Chapter 73 - In the instant case apart from these process, the appellants are also doing a drilling operation - The appellants have explained that the drilling is done to create a hole on the item for the purpose of providing a hold for other operations and for the purpose of carrying these items from one place to another - Apparently, such drilling operation has no impact on the essential character of the item manufactured by the appellant and thus, the classification cannot change solely on the ground of drilling operation - No merit in the arguments of Revenue that the classification needs to be changed from Chapter 73 to chapter 84 - appeal of the assessee is consequently allowed: CESTAT [para 5]

- Appeal allowed: AHMEDABAD CESTAT

2019-TIOL-3646-CESTAT-AHM

Sanghi Industries Ltd Vs CCE & ST