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TMI Blog2013 (4) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... rview of any such activity governing 'life insurance' by virtue of the 'exclusion' under Section 44(f) of the Life Insurance Corporation Act, 1956 (LIC Act in short) and 'exemption' under Section 36(1)(a) of the General Insurance Business (Nationalisation) Act, 1972. 2. The parties and proceedings are referred to, as arrayed in W.P. (C) No. 15892 of 2008, treating the same as the lead case. The case of the petitioner/State Insurance Department is that their constitution and existence is only in discharge of the duties cast upon them, by virtue of the statutory obligations, giving 'life insurance' protection to the employees of the State, in tune with the mandate of Rule 22A of Part I KSR and so also to insure the assets of the Government/Governmental Institutions, which constitutes public property. It is also stated that this is being pursued in continuation of the Scheme which was in existence for quite long, even prior to the enactment of the LIC Act, 1956 and the General Insurance Business (Nationalisation) Act, 1972. It is for this reason that, exemption/exclusion has been provided for the 'Life Insurance' coverage provided by the petitioner to the State Government employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formity with the directions given by the appellate authority vide Ext. P1. 6. On passing Ext. P4 order by the 4th respondent on 17-3-2008, the lower authority, i.e., the third respondent issued Ext. P5 'summons' dated 19-3-2008, asking the petitioner to appear and furnish the details for the period from 2004-05 to 2007-08. On that day, the Deputy Commissioner appeared and sought for time by '30' days. Just after two days, Ext. P6 Summons was issued on 10-4-2008 for appearance on 29-4-2008, on which day, the Deputy Commissioner appeared again and sought for 30 days' time. Just one week after, Ext. P7 summons was issued on 7-5-2008, ordering personal presence of the Commissioner on 29-5-2008. Alleging harassment at the hands of the concerned respondent, the petitioner approached this Court by filing W.P. (C) No. 15892 of 2008 and as per the interim order dated 28-5-2008, further proceedings pursuant to Ext. P7 were stayed, which was subsequently extended from time to time and until further orders, vide order dated 27-7-2009. 7. During the pendency of the above writ petition and operation of the interim stay, the respondents took the temerity to issue another demand notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coverage being given to the public property. The learned Spl. Government Pleader further submits that the position has been clarified by the Central Government as well, as per the Circular No. 89/7/2006-Service Tax, dated 18-12-2006 (Ext. P5). Reference is also made to Ext. P11 application for exemption preferred by the petitioner under Section 93 of the Finance Act, 1994 as early as in 2008, which is stated as still pending. 9. Mr. Tojan J. Vathikulam, the learned Central Government Counsel submits that the liability to pay 'service tax' takes its origin from the Finance Act, 1994 and the liability to pay the same is not subjected to any prescriptions, to the contrary in some or other Statute. Referring to Sec. 65(105)(d) and 65(105)(zx) of the Finance Act, 1994, the learned Counsel submits, the insurance, both under the 'General' segment, as well as in the 'Life' segment, are clearly covered by the above provisions and so much so, the petitioner cannot seek to be absolved with reference to Sec. 44(f) of the LIC Act or 36(1)(a) of the General Insurance Business (Nationalisation) Act, 1972. It is further pointed out that the specific circumstances and how the exemption could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (f) any scheme in existence on the appointed day or any scheme framed after the appointed day with the approval of the Central Government whereby, in consideration of certain compulsory deductions made by Government from the salaries of its employees as part of the conditions of service, the payment of money is assured by Government on the death of the employee concerned or on the happening of any contingency dependent on his life. (g)...(xx)" Section 36(1)(a) of the General Insurance Business (Nationalisation) Act, 1972 : "36. Exemptions. - (1) Nothing contained in this Act shall apply in relation to - (a) any general insurance business carried on by a State Government, to the extent to which such insurance relates to properties belonging to it or undertakings owned wholly or mainly by the State Government; or to properties belonging to semi-government bodies, or any Board or body corporate established by the State Government under any statute or any industrial or commercial undertaking in which the State Government has substantial financial interest, whether as shareholder, lender or guarantor." Section 22A of Part I KSR : 22A.&emsp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be stated as a 'taxable service' provided to any individual or establishment or class of such persons. This being the position, there is considerable force in the submission made by the learned Special Government Pleader with reference to the said provision. 15. But then, the question is whether the General Insurance Business being done by the petitioner, to cover the assets of the State Government or the assets of the financial institutions in which the State is having financial interest, could be said as part of discharging any statutory duty. In the case of assets of the Government, there may not be any room for much controversy, as no service is being extended to anybody else, but to the self. But with regard to the institutions in which the Government is having financial interest, even if it be a Government Company as contemplated under Section 617 of the Companies Act, 1956, the position may be different. So also, it is not discernible from the materials on record whether the petitioner is providing 'General Insurance Coverage' to other commercial establishments or persons including by way of 'Motor Insurance' or such other Policy and if it be so'. will it come w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of statutory obligations which are to be fulfilled in accordance with law. The fee collected by them for performing such activities is in the nature of compulsory levy as per the provisions of the relevant statute, and it is deposited into the Government treasury. Such activity is purely in public interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consideration. Therefore, such an activity performed by a sovereign/public authority under the provisions of law does not constitute provision of taxable service to a person and, therefore, no service tax is leviable on such activities. 3. However, if such authority performs a service, which is not in the nature of statutory activity and the same is undertaken for a consideration not in the nature of statutory fee/levy, then in such cases, service tax would be leviable, if the activity undertaken falls within the ambit of a taxable service." From the above Circular, issued by the Central Government, it is clear that, when the Insurance Department is collecting premium, providing insurance coverage as part of the duty cast upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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