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TMI Blog2008 (10) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... OMMR/2006 dated 11/10/2006. 2. The necessary facts that arise for consideration are the appellants are engaged in providing services under the category of general insurance. The appellants were registered with the authorities for the said purposes. The Finance Act, 2004, increased the rate of service tax to 10% from the earlier rate of 8% and in addition education cess @2% on the gross amount of service tax, was also imposed. Hence, it was noticed by the lower authorities that with effect from 10/09/2004, the appellants are required to pay service tax at the revised rate. Coming to such conclusion, the lower authorities issued show cause notice to the appellants to discharge the differential service tax liability along with education cess for the period commencing from 10.09.2004 till the end of the policy. This demand was raised on the ground that the appellants had received advance premium from their customers at the lime of issuance of the general insurance policy. 3. The appellants contested the show cause notice on the ground that on the day of issuing the general insurance policy, the appellant had discharged the service tax liability as was in force during the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to a policy holder by a general insurance business in relation to the general insurance business. He also draws our attention to the Section 66, which is for charging of service tax. 6. Ld. Counsel draws our attention the CBEC Circular No. 6/1/95 dated 02/05/95 [reported in 1995 (8) RLT M32] submits that the CBEC while giving clarifications on the services of the general insurance policy, very precisely indicated that period covering risk from 01/07/94 and a premium received there on will alone attract service tax and the premium received prior to 01/07/94 will not be taxable. He draws attention to the CBEC Circular No. 65/14/2003 dated 05/11/2003 [reported in 2003 (59) RLT M32] to submit that the maintenance attract, which are entered prior to the date of bringing service under tax were not taxable. He would also draw our attention to the CBEC Circular No 62/11/2003 [reported in 2003 (58) RLT M9] and submits that it is the policy of the Government not to tax the services for earlier period before the services came into tax net. He draws our attention to the decision of the Tribunal in the case of Art Leasing Ltd. vs. CCE , as reported at 2008 (84) RLT 597 (CESTAT -Ban. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x has to be charged accordingly. He draws our attention to the meaning of word insurance from the Black's Law Dictionary. He submits that in this case was for e.g., an insurance policy was issued on 17/10/2006, which was to be in force for the period 22/10/2006 to 21/07/2007. It is his submission that though the policy was issued on 17/10/2006, risk cover started from 23/10/2006 for the whole year even though the taxable event occurred on the date of the policy is issued, it is the continuing service, as the terms and conditions are to provide the service for the whole year. It is the submission that this is a very unique and peculiar case and draws our attention to the explanation to Rule 6 of the Service Tax Rules, 2002. It is his submission that the case laws, which have been cited by the Ld. Counsel are not at all relevant. The facts in those cases and the facts in this case are different. As regards the Circular dated 2/5/95, it is his submission that levy was brought into force for the first time, while in the case of enhanced levy, the levy was already in existence. There was a subsequent enhancement on the rate of service tax. He would rely upon the decision of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment. 12. The taxable secvices, i.e. consideration for discharge of service tax liability are enumerated in the sub-section 65(105)(d). The taxable services in this case of general insurance business is enumerated at 65(105)(d), which is to a policy holder by an insurer carrying on general insurance business in relation to the agent, insurance business. 13. It is undisputed that the appellant is carrying out the business of general insurance. It is also undisputed that the appellant collected the premium in advance as provided under the provisions of Section 64VB of the Insurance Act, 1938 on insurance/assurance on the policy issued. The said Section 64VB of the Insurance Act, 1938 is as under:- No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner. For the purposes of this section, in the case of risks for which premium ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. The appellants are aggrieved over the impugned Order. Shri T.M. Sreedharan, the learned Advocate, appeared for the appellants and Shri K. Sambi Reddy, the learned JDR, for the Revenue. Heard both sides. The Banking and Financial Services came under the Service tax net w.e.f. 16.7.2001. At that time, CBEC issued clarification to the effect that in respect of Hire Purchase Contracts entered prior to 16.7.2001 and installments of which were received after 16.7.2001, there is no Service tax liability. In our view, the same logic is applicable to the present case also. When the Hire Purchase Contract is entered, the taxable event occurs. We agree with the appellants that the installment payments are only obligations of the hirer. The finding of the Commissioner (Appeals) that the appellant continues to provide service during the payment of installments is not correct. Therefore, the rate of Service tax 'will be the rate prevailing on the date on which the contract is entered into. Consequently, the demand of differential amount applying the higher rate, which can into effect from 14.5.2003, will not be applicable in respect of the contracts entered prior to that date. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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