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TMI Blog2022 (1) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... ng fees, backdating charges and recoveries of look-in, recovered by them over and above the normal premium, under the taxable service of "Life Insurance" as defined under Section 65 (58), 65 (61) and 65 (80) read with Section 65 (105) (zx) of the Chapter V of Finance Act, 1994, in terms of Section 67(1) of the Finance Act, 1994. 30.2) I, confirm the demand of Service Tax amounting to Rs. 35,84,582/- (Rupees Thirty Five Lakhs Eighty Four Thousand Five Hundred and Eighty Two only), under the taxable service of "Life Insurance", under section 73(2) of the Finance Act, 1994. 30.3) I, order for payment of interest under Section 75 of the Act, at appropriate rates prevalent during the material period, on the delay in payment of service tax amounting Rs. 35,84,582/- (Rupees Thirty Five Lakhs Eighty Four Thousand Five Hundred and Eighty Two only) confirmed at para 30.2) above. 30.4) I, impose a penalty under Section 76 of the Finance Act, 1994, on the notice, which shall be one hundred rupees for every day during which such failure continued or at the rate of one percent (1%) of such tax, per month, which ever is higher, starting with the first day after the due date till the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of the same charges for the earlier period which was confirmed by the adjudicating authority vide order in original No 17/ST/SB/2011-12 dated 30-1- 2012. was considered and has been remanded back, by the CESTAT as per the order reported at 2013-TIOL-1296- CESTAT-MUM * No service has been provided by the appellants in respect of the three charges, which are sought to be included in the taxable value of the Services of Life Insurance Services defined as per Section 65 (105) (zx) provided by them. * As per the various clarifications issued by the Board from time to time and from the definition of taxable service under the category of Life insurance services, it is evident that after the amendments made in Section 65 (105) (zx), by the Finance Act, 2011, the Service Tax under this category is leviable on the risk portion and investment management part of the premium paid by the policy holder. * In the case of Shilpa Colour Labs 2007 (5) STR 423 (Tri) [maintained by Hon. Supreme Court as reported in 2009 (14) STR 163 (SC)]has held that the amount received by the service provider shall have nexus to the taxable service rendered in order to consider the said amount as valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed even in the revised definition. However in the case of other schemes, a significant portion of the premium is used towards investment, while the rest is allocated towards various overheads and mortality. IRDA in its circular Ref: IRDA/ACT/CIRVIP/171/2010 dated November 21, 2010 has made it mandatory for the insurance companies to share this break-up with the policy holders in the case of "Variable Insurance Policies" under the heads: premium received, deductions towards mortality, commission and expenses, interest added and closing balance. Thus amounts relating to deductions for mortality, commission and expenses are not available for investment. After the enactment of the new levy, it is proposed to amend the Service Tax Rules to give the option to pay tax at the standard rate on that portion of the premium that has not been invested and is so indicated in any of the documents given to the policy holder. Where the break-up is not indicated in any document issued to the policy holder, option will be given to pay tax @ 1.5% of the gross amount of premium." 4.5 The three charges sought to be included in the taxable value of the Life Insurance Services, provided by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88/2011-12 dated 30.01.2012 issued by the Commissioner (TAR), Mumbai, and have found no basis, reasoning or facts which would affect into differentiation or deviation from the said findings. Nevertheless, I proceed with my findings of this issue." The order of the Commissioner (TAR) referred to by the learned adjudicating authority has been set aside by CESTAT vide order as reported at 2013-TIOL-1296-CESTAT-MUM holding as follows: "5.1 When the Service Tax levy is imposed on life insurance policy, the Hon'ble Finance Minister in his budget-speech before the Parliament had categorically stated that he is imposing Service Tax on life insurance service to the extent of risk premium. The instructions issued by the CBE&C at the time of imposition of Service Tax on life insurance service also made it clear that Service Tax is leviable on that portion of the service, which pertains to the risk element ad in the case of composite policy i.e. risk + saving, the taxes are applicable only on the risk premium and not on the premium for saving. Subsequently, in 2008 also at the time of introduction of Investment Management Service provided under ULIP, it was clarified that consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on made by us and pass a speaking order after considering all the submissions made by the appellant by giving a clear finding on each and every contention raised by the appellant." 4.7 From the analysis of the definitions of the Life Insurance Services as per Section 65 (105) (zx) and various clarifications issued by the Board it is quite evident that the charges which are towards the risk cover and managing investment for the policy holders, are part of the value of such taxable services provided by the appellant. 4.8 The argument advanced by the revenue that the scope of definition of taxable service as defined by the Section 65 (105) (zx), do not limit the provision of the taxable service under the said category to the policy holder but is applicable to the services provided by the appellant to the applicant for insurance license because of use of phrase "any person" is without any substance. The phrase "any person" cannot be read in isolation, but will have to be read along with the entire definition as per the said section. The expression "any person" was inserted in Section 65 (105) (zx) by the Finance Act, 2006 to levy service tax on re-insurance activities carried by Life ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of taxable service is with any associated enterprise." [emphasis supplied] 15. It was argued that payment received in 'any form' and 'any amount credited or debited, as the case may be...' is to be included for the purposes of arriving at gross amount charges and is leviable to pay service tax. On that basis, it was sought to argue that the value of goods/materials supplied free is a form of payment and, therefore, should be added. We fail to understand the logic behind the aforesaid argument. A plain reading of Explanation (c) which makes the 'gross amount charges' inclusive of certain other payments would make it clear that the purpose is to include other modes of payments, in whatever form received; be it through cheque, credit card, deduction from account etc. It is in that hue, the provisions mentions that any form of payment by issue of credit notes or debit notes and book adjustment is also to be included. Therefore, the words 'in any form of payment' are by means of issue of credit notes or debit notes and book adjustment. With the supply of free goods/materials by the service recipient, no case is made out that any credit notes or debit notes were issued or any boo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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