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TMI Blog2023 (6) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no merit in the demand of service tax on this count and it needs to be set aside. The payment of expenses to the insurance agents for attending training is not in relation to the service of soliciting or procuring business provided by the insurance agents. The taxable event is rendition of the taxable service and in the present circumstances no taxable service is rendered by the insurance agents to the appellants for which the said expenses are reimbursed by the appellants - the training for insurance agents, is mandatory and imperative and is not only statutorily prescribed but is also a must for knowledge enhancement and to imparting the necessary skills beside the development and acquisition of work habits and product knowledge for the insurance agents. Section 42 of the Insurance Act mandates that individual insurance agents must possess the requisite qualification and/or practical training and are required to pass the examination as may be specified by the IRDA. A mandatory 50 hours of training to agents prior to issuance of the license is provided for. Without a doubt, training per se is not a part of appellants service it only seeks to make agents better at perf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fe insurance business providing life insurance products to their policy holders (the customers). The appellants are also registered with Insurance Regulations and Development Authority [ IRDA ] for carrying of their business. In order to conduct its business, the appellants engage both individual agents and corporate agents (commonly known as insurance agents) to solicit and sell their insurance products and pays them commission in terms of Section 40A of the Insurance Act, 1938 [IA]. Apart from commission and incentive appellants also incur expenses towards inland and overseas training of the agents in certain cases. The department vide show cause notice No. LTU/ST/MAX/02/2014-15 dated 14.10.2014, for the period April 01, 2013 to March 31, 2014 raised the following three issues: (i) Demand of Service tax amounting to Rs. 77,67,147/- in respect of expenditure of Rs. 6,28,40,993/- incurred by the appellants on foreign training of insurance agents; (ii) Demand of Service tax amounting to Rs. 47,70,218/- on the expenditure of Rs. 3,85,94,000/- incurred by the appellants by way of reimbursement of certain expenses related to the training of insurance agents; (iii) Demand of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the payment of expenses to the insurance agents for attending training is not in relation to the service of soliciting or procuring business provided by the insurance agents. The taxable event is rendition of the taxable service and in the present circumstances no taxable service is rendered by the insurance agents to the appellants for which the said expenses are reimbursed by the appellants. The appellants have also placed reliance in support of their proposition on the decision of this Tribunal in the case of Intercontinental Consultants technocrats Pvt. Ltd. Vs. Union of India [ 2013 (29) STR 9 (Del.) ] as affirmed in Union of India Vs. Intercontinental Consultants Technocrats Pvt. Ltd. [ 2018 (10) GSTL 401 (SC) ] and has also placed reliance in the case of M/s Bajaj Allianz Life Insurance Co. Vs. Commissioner of Central Excise Service Tax, Pune-III [ Final Order No. 86013-86023/2019 ] as also their own case and referred to in para 3 above. 5.3 (i) Reference is also invited to Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 whereby it could be argued that it does provide for inclusion of certain expenses towards the value for charging of serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation, from manufacturer for carrying out any service of any motor car, light motor vehicle or two wheeled motor vehicle manufactured by such manufacturer; (vii) the commission or any amount received by the rail travel agent from the Railways or the customer; (viii) the remuneration or commission, by whatever name called, paid to such agent by the client engaging such agent for the services provided by a clearing and forwarding agent to a client rendering services of clearing and forwarding operations in any manner; (ix) the commission, fee or any other sum, by whatever name called, paid to such agent by the insurer appointing such agent in relation to insurance auxiliary services provided by an [insurance agent; and] (x) the amount realised as demurrage or by any other name whatever called for the provision of a service beyond the period originally contracted or in any other manner relatable to the provision of service. 5.4 As also stated aforesaid that the training for insurance agents, is mandatory and imperative and is not only statutorily prescribed but is also a must for knowledge enhancement and to imparting the necessary skills beside the development and ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration not wholly or partly consisting of money, be such amount in money, with the addition of service tax charged, is equivalent to the consideration; (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. (2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service. (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed Explanation. -For the purposes of this section,- (a) consideration includes- (i) any amount that is payable for the taxable services provided or to be provided; (ii) money includes any currency, cheque, promissory note, letter of credit, draft, pay order, travellers cheque, money order, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance auxiliary service is upon the appellants. However, the value at which such tax is leviable has to be considered in terms of Section 67(1)(i) of the Act. Thus, where the provisioning of service is for a consideration in monetary terms, the service tax is leviable on the gross amount charged. This, i.e. the gross amount charged is defined in clause (c) of Explanation to Section 67 as under: Gross amount charges includes payment by (c) cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment, and any amount credited or debited, as the case may be, to any account, whether called suspense account or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprises. Thus, any payment by whatever mode paid viz. cheque, credit card, direct debit to account or in any other form including issuance of credit or debit notes is a component of the value for purpose of determination of the tax liability. It has been contended that the agents do not owe any amount(s) to the appellant requiring a set off against commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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