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TMI Blog2013 (9) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... partment under 'Insurance Auxiliary Service', 'Life Insurance Service', 'Renting of Immovable Property' and 'Business Support Services'. Audit of the records of the appellant company revealed that during the financial year 2004-05 to 2008-09, the appellant had not included income earned in the nature of - (a) Recovery of Agency Processing Fees, (b) Lapse Charges, (c) Back Dating Alteration Charges, (d) recoveries on Look in and (e) Policy Reinstatement Fees, in the gross taxable value. Accordingly, a show-cause notice dated 16.10.2009 was issued demanding Service Tax of Rs. 18,70,50,875/- on the gross amount of Rs. 1,53,91,14,610/- recovered by the appellant as additional charges for services rendered for the period 2004-05 to 2008-09. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is liable to be paid only on risk premium and not on other charges collected. The learned Counsel also relies on the clarification issued by the Boards from time to time. He also relies on the Finance Minister's speech made on 1st July, 2004 when Service Tax was levied on life insurance business. In para 49 of the speech, the Finance Minister had clearly stated that Service Tax is being imposed on life insurance service to the extent of risk premium. He further contends that the Board had clarified the position vide Circular NO. B2/8/2004-TRU dated 10.9.2004, wherein it was stated as follows:- "2.1 Life Insurance services: 21.1 In Budget 2004, it has been decided to levy service tax on that portion of the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 4.2.1 Unit-Linked Insurance Plan (ULIP) is an insurance product offered by life insurance companies combining both risk cover and benefits of investment. ULIP being a combination product, premium amount paid under ULIP consists of risk premium and investment component. Risk premium may be for life or health or any other authorized purposes. Unlike in the case of traditional life insurance policies, policyholder of ULIP can choose portfolios for investment with different investment aims such as low, medium and high-risk category or combination thereof. ULIP enables the policyholder to take part in the scheme collectively and becoming the beneficiary like mutual funds. The investment risk is borne by the ULIP policyholder. 4.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice' and management of investment is taxed under the proposed taxable service." Again in 2011, when the scope of the Service Tax was expanded, the Board vide Circular No. 334/3/2011-TRU dated 28.2.2011 had further clarified as follows:- "3.2 Life Insurance Service [section 65 (105) (zx)]. The scope of this service is proposed to be expanded to cover all services, including relation to management of investments." From these clarifications, it is evident that the levy of Service Tax on life insurance prior to 1.5.2011 covered only the risk cover provided and, therefore, the Service Tax was payable only on the risk premium. 3.1 As regards the various charges collected by them, the agency processing fees related to amount colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at these charges are collected as per the guidelines given by the Insurance Regulation and Development Authority (IRDA). 3.5 Accordingly, it is contended that the appellant is not liable to pay Service Tax on the various charges as discussed above for the period prior to 1.5.2011. Accordingly, the learned Counsel for the appellant pleads for grant of stay. 4. The learned Commissioner (AR) appearing for the Revenue, on the other hand, reiterates the findings of the adjudicating authority and prays that since the amount involved is huge, the appellant be put to terms. 5. We have carefully considered the submissions made by both the sides. 5.1 When the Service Tax levy is imposed on life insurance policy, the Hon'ble Finance Minister in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the risk premium and nothing else. If that be so, we do not understand how the various charges collected by the insurer in addition to the risk premium can be taxed under 'Life Insurance Service'. 5.3 The various contentions raised by the appellant have not been examined in detail by the adjudicating authority, who has simply made a sweeping observation that the agency processing fees, lapse charges, backdating alteration charges and policy reinstatement charges were recovered in relation to the life insurance service provided by the noticee and these charges are linked to the risk cover of the policy. This sweeping observation of the adjudicating authority is without examining the matter in detail and without taking into account the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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