Delhi High Court
Max Life Insurance Company Ltd. vs Commissioner Of Central Excise & ... on 3 January, 2018
$~6.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ WRIT PETITION (CIVIL) No. 4264/2015
Date of decision: 3rd January, 2018
MAX LIFE INSURANCE COMPANY LTD. ..... Petitioner
Through Mr. Parag P. Tripathi, Sr. Advocate with
Ms. Anuradha Dutt, Mr. Tushar Jarwal, Mr. Rahul
Sateeja & Mr. Aarush Bhatia, Advocates.
versus
COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX
..... Respondent
Through Mr. Harpreet Singh, Sr. Standing Counsel
& Mr. Bhavya Dubey, Advocate.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE CHANDER SHEKHAR
SANJIV KHANNA, J. (ORAL):
Max Life Insurance Company Limited has invoked writ jurisdiction
of this Court impugning the order-in-original dated 29th January, 2015
passed by the Commissioner of Central Excise and Service Tax to the extent
the order records as under:-
"ii. I, hereby, confirm the demand of Service Tax
amounting to Rs.100,05,78,705 (Rupees one hundred
crore five lac seventy eight thousand seven hundred
five only), as detailed in TABLE-2 to the Show Cause
W.P. (C) No. 4264/2015 Page 1 of 6
Notice, which was so deducted/recovered from
individual insurance agents/corporate agents as Service
Tax and not deposited in the Government exchequer as
required in terms of Section 73A(2) of the Finance Act,
1994 during the period 2006-07 to 2012-13 (upto June,
2012), and order for recovery of the same from them
under the proviso to Section 73A (3) of the Finance
Act, 1994;"
2. The petitioner has also challenged direction given in sub-para viii
imposing penalty under Section 78 of the Finance Act, 1994 for suppressing
material facts to the extent it relates to the direction given in paragraph ii
above.
3. The afore-stated order-in-original, in fact, decides several other issues
in sub-paras i, iii, iv in addition to question of interest, penalty, etc.
4. Upon the writ petition coming up for hearing, vide order dated 29 th
April, 2015, the Court had issued notice relating to direction No. (ii) and
direction No. (viii) to the extent it relates to direction No. (ii). The said
order also granted to the petitioner right to file appeal before the Customs,
Excise and Service Tax Appellate Tribunal (CESTAT) in respect of other
aspects and findings in the order-in-original. The writ petition has remained
pending since then before the Court. The petitioner, it is an accepted
position has filed an appeal before CESTAT against the order-in-original on
other aspects.
5. Counsel for the respondent has opposed the present writ petition in
view of the alternative remedy by way of appeal. He submits that the
petitioner cannot challenge one part of the order-in-original before the High
Court and another portion before CESTAT.
W.P. (C) No. 4264/2015 Page 2 of 6
6. Counsel for the petitioner, on the other hand, has submitted that the
petitioner has paid full amount of service tax on reverse charge on the
commission paid to the agents at the applicable rate of 12%. As per
agreement(s) between the petitioner company and the agents, the petitioner
was refunded or reimbursed 40% or 50% of the service tax component. This
was as per the mutual understanding. Reliance is placed on decision of the
Supreme Court in Rashtriya Ispat Nigam Limited versus Dewan Chand
Ram Saran, (2012) 5 SCC 306, in support of the contention that mutual
agreements are valid and create a bilateral commercial obligation, without
affecting the tax liability imposed as per the charging section. Reference is
made to the decision of the Delhi High Court in Delhi Transport
Corporation versus Commissioner Service Tax, 2015 (38) STR 673 (Del.)
where an identical issue with regard to service tax liability was examined
and relying upon the decision in the case of Rashtriya Ispat Nigam Limited
(supra), the appeal preferred by the Revenue was dismissed. Our attention is
also drawn to the judgment of the Gujarat High Court in General Manager
Food Corporation of India versus Union of India, 2016 (44) STR 211
(Guj.). Lastly, reference is made to decision of the Tribunal itself in HDFC
Standard Life Insurance Company Limited versus Commissioner of
Central Excise, Mumbai-II, 2017 (49) STR 301 (Tri-Mumbai) on the
identical issue.
7. On the question of maintainability of the writ petition, in spite of
alternative remedy, our attention is drawn to an order of the Supreme Court
dated 22nd April, 2016 passed in Writ Petition (Civil) No. 1055/2013, Aircel
Limited and Another versus The Commercial Tax Officer and Another
W.P. (C) No. 4264/2015 Page 3 of 6
and other connected matters, Executive Engineer, Southern Electricity
Supply Company of Orissa Limited (Southco) and Another versus Sri
Seetaram Rice Mill, (2012) 2 SCC 108 and State of U.P. and Others versus
M/s Indian Hume Pipe Company Limited, (1977) 2 SCC 724.
8. Counsel for the respondent, on the other hand, has relied upon
decision of the Supreme Court in A.P. State Financial Corporation versus
M/s Gar Re-Rolling Mills and Another, (1994) 2 SCC 647.
9. Rather peculiar and odd situation has arisen in the present case as the
order-in-original decides several issues and aspects. This order-in-original
dated 29th January, 2015 has been made subject matter of challenge before
the CESTAT on several aspects in view of the liberty granted by this Court
vide order dated 29th April, 2015, except for direction No. (ii) and direction
No. (viii) which extend to the direction No. (ii).
10. Thus, we have a situation where the petitioner has invoked a statutory
remedy of appeal before the CESTAT challenging the order-in-original
dated 29th January, 2015 on all aspects, except direction No. (ii) and
direction No. (viii) to the extent it relates to direction No. (ii). In these
circumstances, we do not think it will be appropriate and proper for us to
examine the impugned order in piecemeal. In fact, while deciding the writ
petition, we would have to examine aspects and issues, which would also
arise before CESTAT.
11. However, the issue arises on requirement and mandate of pre-deposit.
The order-in-original holds and accepts that service tax amounting to
Rs.100.5 crores has to be paid. Thus, entire service tax payable on reverse
W.P. (C) No. 4264/2015 Page 4 of 6
charge basis on the commission paid to the agents, has been paid. The said
position is admitted and accepted by the respondents and is also not
challenged and contested in the order-in-original. The contention of the
respondent is that the petitioner must also pay in addition and over and
above 12% service tax, the amount received from the agents under the
mutual agreement in view of Section 73A (2) notwithstanding the payment
made. The petitioner, as noticed above, has referred to several decisions in
which the aforesaid aspect has been considered, including the judgment of
the Tribunal in the case of HDFC Standard Life Insurance Company
Limited (supra).
12. Be that as it may, as the petitioner has paid full amount of service tax,
which is an accepted and admitted position, on reverse charge basis on the
commission payment, we would direct the Tribunal not to dismiss the appeal
preferred by the petitioner on the ground of "pre-deposit" under direction
(ii), provided the petitioner has made pre-deposit in accordance with law in
respect of other adjudication subject matter of the order-in-original dated
29th January, 2015. We further permit the petitioner to file an amendment
application before CESTAT and challenge the direction No. (ii) and
direction No. (viii) to the extent it relates to direction No. (ii) in the
impugned order dated 29th January, 2015 within a period of three weeks
from today. In case such amendment application is moved, the same would
be considered by the CESTAT in accordance with law and it would not be
dismissed on the ground that the amendments sought are belated or beyond
time.
W.P. (C) No. 4264/2015 Page 5 of 6
13 We have been compelled to take recourse and issue the aforesaid
direction to deal with the anomalous position wherein the same order is
subject matter of challenge before the High Court and before the Tribunal.
This writ petition was entertained and notice was issued limited to direction
No. (ii). This order, therefore, has been passed in the particular facts of the
present case, which are exceptional. This order cannot be treated as a
precedent, which will apply to other cases. We would also request the
CESTAT to take up the appeal for hearing as expeditiously as possible.
14. With the aforesaid observations and directions, the writ petition is
disposed of. We clarify that we have not commented on the merits. It will
be open to the CESTAT to examine the issue, without being influenced by
any observation made in this order.
SANJIV KHANNA, J.
CHANDER SHEKHAR, J.
JANUARY 03, 2018
VKR
