By TIOL News Service

MUMBAI, AUG 13, 2014: AGAINST the appellant a Service Tax liability of Rs.1.74 lakhs under the category of 'Business Auxiliary Service' was upheld by the Commissioner(A).

Aggrieved by the same, the appellant is before the CESTAT.

It is submitted that they have been authorized to act as a corporate agent for procuring or soliciting insurance business; that the service tax liability has been discharged by Oriental Insurance Co. Ltd. on reverse charge basis and, therefore, the appellant is not liable to pay service tax and hence, stay should be granted.

The AR submitted that the appellant has merely referred people to the insurance company and the said activity amounts to canvassing/promotion of business for the insurance company falling within the purview of “Business Auxiliary Services” and, therefore, the liability to discharge service tax is on the appellant, who has rendered the services and not on the insurance company, who is the recipient of the service. If the insurance company has discharged the service tax liability that would not obliterate the liability of the appellant and, therefore, the appellant should be put to terms, the AR pleaded.

The Bench observed that the appellant is only canvassing/promoting business of insurance company and, therefore, the said activity, prima facie , comes within the purview of 'Business Auxiliary Services' and the liability to pay service tax is on the service provider and not on the recipient of service.

It was further observed that even if the service tax liability was discharged by the recipient of the service that cannot compensate for the payment required to be made by the appellant nor does it obliterate the liability to pay service tax by the appellant.

Holding that the appellant had not made out a prima facie case for grant of stay, the Bench directed the appellant to make a pre deposit of Rs.1.74 lakhs and report compliance for obtaining a stay from recovery of the balance adjudged dues.

(See 2014-TIOL-1497-CESTAT-MUM)