2007 (12) TMI 134 - AT - Service Tax

Reinsurance broker - brokerage received by them from reinsurers abroad as consideration for the service rendered by them as part of the reinsurance transaction between such reinsurers and Indian insurance companies - answers of dept. to some of queries are inconsistent with the Revenue s case brought out in the impugned order - Revenue to be represented by a special counsel Jt. Chief Departmental Representative is directed to engage special counsel matter is adjourned

Summary

Issues involved:
Determining liability for service tax as a reinsurance broker under relevant laws and regulations.

Analysis:
The substantive issue in this case revolves around the liability of the appellants to pay service tax as demanded by the Commissioner for the period between July 2001 to March 2006. The question at hand is whether the appellants, acting as reinsurance brokers, are subject to service tax under the definitions provided by the Insurance Regulatory and Development Authority Act, 1999, and the Finance Act, 1994. The brokerage received by the appellants from reinsurers abroad is under scrutiny, particularly in the context of reinsurance transactions between these reinsurers and Indian insurance companies. The demand on the appellants exceeds Rs. 1.40 crores. During the hearing, the Senior Advocate representing the assessee and the SDR presented their arguments. The SDR referenced relevant regulations and functions of a reinsurance broker but faced inconsistencies in responding to queries. As a result, the Tribunal deemed it necessary for the Revenue to engage a special counsel to properly represent their case before the Bench. The directive was issued to ensure the Revenue's interests are adequately presented, with a timeline set for compliance. The case was scheduled for further mention on a specified date.

This judgment delves into the complex issue of service tax liability concerning reinsurance brokerage activities. The Tribunal scrutinized the definitions and regulations governing the role of reinsurance brokers to determine the applicability of service tax in this scenario. The demand amounting to over Rs. 1.40 crores underscores the significance of the decision. The engagement of a special counsel by the Revenue was deemed essential to ensure a comprehensive representation of their case, highlighting the importance of a robust legal defense in such matters. The Tribunal's directive for expeditious action in securing a special counsel demonstrates the commitment to a fair and thorough adjudication process. The decision to postpone further proceedings pending the appointment of a special counsel underscores the Tribunal's emphasis on procedural fairness and the need for competent legal representation in complex tax matters.