2011 (3) TMI 609 - AT - Service Tax

waiver of pre-deposit - Insurance Auxiliary Service - in relation to life insurance business, or general insurance business and includes risk assessment, claim settlement, survey and loss assessment, and therefore the order has traversed beyond the scope of the show cause notice is not tenable prima facie, as the show cause notice dated 14-8-2008 has treated them as providing taxable service under the Insurance Auxiliary Services, which covers the services provided by an Intermediary or Insurance Intermediary, or an Insurance Agent, or life insurance business, or general insurance business, risk assessment, claim settlement, survey and loss assessment - assessees have not made out a prima facie case for total waiver of service tax - Decided against the assessee by way of direction to deposit 25 % of tax

Summary

Issues involved:
Application for waiver of pre-deposit of service tax under "Insurance Auxiliary Service" as per Section 65(55) of the Finance Act, 1994. Allegations of service as "actuary" versus being treated as an Intermediary or Insurance Agent. Interpretation of the definition of "Intermediary or insurance intermediary" under Section 2(1)(f) of the Insurance Regulatory and Development Authority Act, 1999. Direction for pre-deposit of 25% of the tax demand within eight weeks.

Analysis:
The judgment dealt with the application for waiver of pre-deposit of service tax amounting to Rs. 33,50,320 under the category of "Insurance Auxiliary Service" as per Section 65(55) of the Finance Act, 1994. The issue arose from a discrepancy between the show cause notice alleging the service as "actuary" and the authorities below treating the service providers as an Intermediary or Insurance Agent under the category of "Insurance Auxiliary Services." The contention that the orders exceeded the scope of the show cause notice was dismissed as the notice clearly identified the taxable service as falling under the Insurance Auxiliary Services, covering various aspects related to insurance business. The argument that the service providers could not be classified as intermediaries based on the definition under Section 2(1)(f) of the Insurance Regulatory and Development Authority Act, 1999, was also rejected. The judgment emphasized that the definition of "Intermediary or insurance intermediary" includes various categories of persons, and registration under Section 42 of IRDA, 1999 is required for such individuals. As the issue was contentious, the appellants were directed to make a pre-deposit of 25% of the tax demand within eight weeks. Upon compliance, the requirement for pre-deposit of the remaining tax, interest, and penalty was waived, and recovery stayed pending the appeal. Non-compliance would lead to the vacation of the stay and dismissal of the appeal without prior notice, with a reporting deadline set for compliance.