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2022 (10) TMI 923 - AT - Service TaxLevy of service tax - Investment or Management Service under ULIP - Policy Administration Charges - Front End Load - Switching Charges - amount collected by the appellant Insurer from the Policy holders - period 1.7.2010 to 30.04.2011 - barred by time limitation or not - HELD THAT - The issue is no longer res integra and has been allowed in favour of the Insurance Company under the similar facts and circumstances in the case of M/S SAHARA INDIA LIFE INSURANCE CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LUCKNOW (VICE-VERSA) 2018 (5) TMI 1217 - CESTAT ALLAHABAD wherein by a Coordinate Bench (of which one of us Member (Judicial) was a Member of the Division Bench) wherein it has been categorically held that prior to 1.5.2011 policy administration charges etc. are not chargeable to service tax. Further in view of the clarification by the Board vide TRU Circular No. DOF/334/1/2010 dated 26.02.2010 that such policy administration charges are chargeable to tax under Section 65(105)(zx). Thus Revenue cannot be permitted to be taken u-turn in the light of the Board s Circular. Further Board circular are binding on the officers of the Revenue Department. The ground of limitation is left open - appeal allowed.
Issues Involved:
1. Whether service tax was leviable under "Investment or Management Service under ULIP" under Section 65(105)(zzzzf) of the Finance Act for the period 1.7.2010 to 30.04.2011 on Policy Administration Charges, Front End Load, and Switching Charges collected by the appellant. 2. Whether the show cause notice is hit by limitation. Issue-wise Detailed Analysis: 1. Levy of Service Tax on Policy Administration Charges, Front End Load, and Switching Charges: The core issue was whether the charges collected by the insurer, such as Policy Administration Charges, Front End Load, and Switching Charges, during the period 1.7.2010 to 30.04.2011, were subject to service tax under "Investment or Management Service under ULIP" as per Section 65(105)(zzzzf) of the Finance Act. The appellant argued that the issue was already settled in favor of insurers in the case of Sahara India Life Insurance Co. Ltd., where it was held that such charges were not taxable before 1.5.2011. The Tribunal noted that the definition of taxable service under Section 65(105)(zx) was amended effective 1.5.2011 to include administrative charges, which were not taxable prior to this date. The Tribunal also referred to the TRU Circular No. DOF/334/1/2010 dated 26.02.2010, which clarified that such charges were taxable under Life Insurance Service and not under ULIP services. The Tribunal found that the appellant had paid service tax on fund management charges as required by the law during the relevant period. Further, the Tribunal referred to the CAG report for the year ended March 2014, which highlighted a legislative lacuna that resulted in the exclusion of certain charges from the service tax net during the period from July 1, 2010, to April 30, 2011. The Tribunal also cited the order of the Commissioner in the case of Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd., which held that the insurer correctly paid service tax only on fund management charges and not on policy administration charges, allocation, and miscellaneous charges. 2. Limitation: The appellant contended that the show cause notice issued on 19.12.2014 was barred by limitation. The Tribunal considered the appellant's argument that the issue was interpretational and that there was regular scrutiny of their records by the Revenue authorities, including detailed investigations by the DGCEI. The DGCEI did not propose any demand for the period from 01.07.2010 to 30.04.2011 for the disputed charges, indicating that the non-payment of service tax was an industry-wide practice and not due to deliberate suppression of facts by the appellant. The Tribunal found merit in the appellant's argument that the extended period of limitation could not be invoked as the issue was interpretational, and there was no suppression of facts with intent to evade tax. Conclusion: The Tribunal concluded that the issue was no longer res integra and had been decided in favor of the insurer company in similar cases. It held that prior to 1.5.2011, policy administration charges, front end load charges, and switching charges were not chargeable to service tax. The Tribunal allowed the appeal, set aside the impugned order, and left the ground of limitation open. The appeal was allowed with consequential benefits. [Order pronounced on 19.10.2022.]
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