Rs 1945 crore Service Tax liability on ESIC effaced by legislative intervention, says CESTAT
By TIOL News Service
NEW DELHI, SEPT 26, 2014: THE Commissioner of Service Tax (Adjudication), New Delhi,confirmed a service tax liability of Rs.1945,35,25,000/- [Rupees One thousand nine hundred forty five crores & more – Mind it!] and ordered recovery of the usual interest and equivalent penalty.
The ground - appellant was found to have provided insurance services during the period in issue.
Had it been any other assessee, the tax demand would have made Breaking News on news channels at Prime Time and any other assessee would also have become a thing of the past!
But the assessee in the instant case is ESIC.
Some information about ESIC - Following the promulgation of the ESI Act, 1948 the Central Govt. set up the ESI Corporation to administer the Scheme. The Employees' State Insurance Scheme of India is a multidimensional social security system tailored to provide socio-economic protection to worker population and their dependents covered under the scheme. Besides full medical care for self and dependents, that is admissible from day one of insurable employment, the insured persons are also entitled to a variety of cash benefits in times of physical distress due to sickness, temporary or permanent disablement etc. resulting in loss of earning capacity, the confinement in respect of insured women, dependents of insured persons who die in industrial accidents or because of employment injury or occupational hazard are entitled to a monthly pension called the dependents benefit.
Be that as it may, against the order dated 27.12.2013 passed by the Commissioner, ESIC had this year filed a Stay application & an appeal before the CESTAT.
Fortunately for them, the Central Government intervened and eased their worries by enacting a new section 100 in the Finance Act, 1994 by the Finance Act, 2014 &which reads -
Special provision for taxable services provided by Employees' State Insurance Corporation.
"100 . Notwithstanding anything contained in section 66 as it stood prior to the 1st day of July, 2012, no service tax shall be levied or collected in respect of taxable services provided by the Employees' State Insurance Corporation set up under the Employees' State Insurance Act, 1948, during the period prior to the 1st day of July, 2012.”. (34 of 1948.)
And, therefore, the CESTAT held thus -
"2. The Finance Act, 2014 (No.25 of 2014), received the assent of the President on 6.8.2014. This Act introduced Section 100 into the Finance Act 1994. This provision enjoins fortified by a non obstante provision qua provisions of Section 66 of the Act, as it stood prior to 1.7.2012, that no service tax shall be collected in respect of taxable services provided by the EmployeesState Insurance Corporation set up under the Employees State Insurance Act, 1948, during the period prior to 1.7.2012.
3. It is asserted on behalf of the appellant and conceded on behalf of Revenue that appellant falls within the ambit of the immunities enacted in Section 100 of the Act. As a consequence of this legislative intervention, the service tax liability of the appellant stands effaced. As a result, the impugned order has become inoperative and the appeal therefore is infructuous. It is so declared. The appeal is disposed of accordingly. As the appeal itself is disposed of, all pending miscellaneous applications are dismissed, as infructuous.”
In passing : One thing is for sure. After we report this order, many channels and portals would certainly follow suit!
(See 2014-TIOL-1857-CESTAT-DEL)
