9911796707
TMI Blog2019 (12) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... erein and it is only those which are exempted that can be held to be covered by the said definition which, having been described as the principal component, does not require restatement. It is obvious the legislature had not intended superfluity in incorporating the services that are not leviable to tax in the definition. There is no definition of service in Finance Act, 1994 and, therefore, forecloses an ascription that is non-existent. Consideration, though essential to determination of value of taxable service, is not the sole indicator of existence of a service. The presumption against superfluity in interpretation of statutes binds us to search for, and determine, the nature of inclusion. As we are dealing with the schema of mechanism for avoiding the cascading effect of taxation upon the final customer who bears the burden of indirect tax levy, it can be posted that there is a recipient of service with whom the buck stops. Such stoppage could be owing to lack of further commercial engagement of the service or because of the non-existence of such service within the jurisdiction to tax. Tax laws have nothing to do with the last consumer in the market chain. It would, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dowment policy' and 'unit linked insurance policy (ULIP scheme)' and the proceedings initiated by service tax authorities are restricted to the latter two. The tax liability on 'life insurance business' defined in section 2 (11) of Insurance Act, 1938, as incorporated in section 65 (51) of Finance Act, 1994, was legislated by the amending section 149 of Finance Act, 2002 by the insertion of '(zx) to a policy holder, by an insurer carrying on life insurance business in relation to life insurance business;' in section 65(105) of Finance Act, 1994, by which such service was made taxable along with services provided to policy holders by certain other specified players in the sector. Though the amending section came into effect from 16th August 2002, by notification no. 8/2002-ST dated 1st August 2002, the taxable service of the defined provider to 'policyholders' was exempted by notification no. 9/2002-ST dated 1st August 2002. 4. That changed with issue of notification no. 23/2004-ST dated 10th September 2004 rescinding the exemption notification alluded to supra and, thereby, not only burdening the service with a levy but also affording an opportunity for the tax authorities to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved for providing 'output service' and the expressions employed therein have been defined in rule 2 of the said rules thus '(r) "provider of taxable service" include a person liable for paying service tax;' '(l) "input service" means any service,- (i) used by a provider of taxable service for providing an output service; or….' '(p) "output service" means any taxable service,…, provided by the provider of taxable service to…, as the case may be, and the expressions 'provider' and 'provided' shall be construed accordingly;' As the eligibility to take the credit on procurement of services by the appellant is not in contention, that aspect need not detain us. According to the impugned order, the appellant herein was excluded from levy of tax on 'management of investment' of funds placed by the policyholder under the 'unit linked insurance policy' and on some portion of the premium paid by the holder of 'endowment' till the whole of it was made taxable and which constituted consideration for the handling of investments to enable committed returns to the policyholder. This, according to the adjudicating authority, made the appellant to be a provider of 'exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the non-excluded portion of the premium received from holders of 'endowment' policy having been overcome by taxing the entire premium, under rule 6(7A) of Service Tax Rules, 1994, at 1% as representing the 'risk cover' in specific circumstances of non-identification of the latter, Learned Counsel argues that the single service, contemplated in the statute, remains undisturbed. Furthermore, according to him, the investment of some portion of the premium is not intended to benefit the policyholder but to facilitate the appellant who was contractually bound to make good the commitment of return therein. For these reasons, he submitted that the service remains single and indivisible as 'life insurance business' and, hence, not within the ambit of rule 6 of CENVAT Credit Rules, 2004. 9. It is further submitted by Learned Counsel that the definition of 'exempted service' requires that the whole of it be exempt for the restrictions in rule 6 of CENVAT Credit Rules, 2004 to be operable; reliance has been placed on the decision of the Tribunal in Sahara India Life Insurance Co Ltd v. Commissioner of Central Excise [2018 (5) TMI 1218-CESTAT Allahabad] holding that '5. Having considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services that are not leviable to tax, it is the contention of Learned Authorized Representative that subsequent rendering of taxability of a service is indicative of absence of leviability before such date and that legislative intent to tax only 'risk cover' from 10th September 2004 with other services rendered liable separately and subsequently implies the existence of several services within the same bundle offered to the same recipient. It is her submission that both 'endowment policies' and 'unit linked insurance policies' entice holders to these schemes with promise of returns in addition to coverage of risk. Alleging that discharge of tax liability on one of the services will not entitle the appellant to the benefit of CENVAT credit on all 'input services' in its entirety, reliance is place by her on the decision of the Tribunal on Reliance Life Insurance Co Ltd v. Commissioner of Service Tax, Mumbai [2018 (363) ELT 1050 (T)]. Referring to circular no. 354/9/2011-TRU dated 12th July 2011 of Central Board of Excise & Customs, elaborating that the compounding of liability on risk cover is limited only to that, it is her contention that appellant is barred from claiming that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 remain the same and, that but for the exemption notification no. 9/2002-ST dated 1st August 2002, the whole of the premium would have been liable to tax under the former; even the subsequent amendment in 2004, by which 'risk cover' was subjected to tax, cannot erase the essential integrity of the product offered in the course of 'life insurance business' to extract a new service. Life insurance policies with limited risk cover may not have much appeal for the Indian consumer and the prospect of a return of contribution, packaged as premium and comprehended as premium by the policy holder, impacts upon the marketability of the products. It is, therefore, intrinsic to life insurance business that there be some recompense for having survived the policy term with nothing to show for it. Moreover, as pointed out by Learned Counsel, an activity that has to be deemed to be a service, as per Explanation (i) therein, despite being taxable thereafter, will not conform to the expression 'service' in rule 2(e) of CENVAT Credit Rules, 2004. 15. For further elucidation, it would not be out of place to peruse the inclusive component of the definition of 'exempted service' which pertains to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
