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TMI Blog2024 (7) TMI 1458X X X X Extracts X X X X X X X X Extracts X X X X ..... ny conditions and circumstances under which its passengers are assured for its liability to indemnify in case of any loss. In order to issue an insurance policy, the appellant should have to be licensed with the Insurance Regulatory and Development Authority (IRDA), in order to run business of insurance in India. The IRDA is an autonomous statutory body responsible for managing and regulating insurance re-insurance industry. In the instant case, there is no insurance policy issued by Appellant mentioning any conditions and circumstances under which its passengers are assured for its liability to indemnify in case of any loss. In order to issue an insurance policy, the appellant should have to be licensed with the Insurance Regulatory and Development Authority (IRDA), in order to run business of insurance in India. The IRDA is an autonomous statutory body responsible for managing and regulating insurance re-insurance industry - It has to be noted that such a victim/third party has not paid any amount of such 'surcharge'. Consequently, we hold that for the period prior to 1.7.2012, the accident surcharge collected by the appellant is not in the nature of premium and such acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers conferred by Section 3 of the Road Transport Corporation Act, 1950 (Central Act 64 of 1950), read with Section 5 thereof, by the State Government. In the provision of the service of transportation of passengers, there are several possibilities of an accident or damage by the Appellant's vehicle. Any compensation payable to the affected ones out of social or legal obligation are additional cost of operation on the Appellant. The appellant also has legal obligations created under Motor Vehicle Act, 1988, at the same time wherein related costs have to be borne. 2.1 The Rajasthan Government Transport Department vide its notification approved the collection of Accidental Compensation Surcharge for transportation of passengers by the Appellant. In compliance with the notification, the appellant initiated collection of the Accidental Compensation Surcharge, under the Passenger and Third Party Accidental Compensation Policy-2000 . As per this policy, the collected amount of 'Accidental Compensation Surcharge' was accounted as 'Accidental Compensation Fund' and the amount collected in the fund is utilized to pay out related liability created on the appellant due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to indemnify the insured in the case of a financial / personal loss arising from the insured risk. The insured receives a contract, called the Insurance policy, which details the conditions and circumstances under which the insured will be financially compensated. The ld counsel submitted that the collection of the 'Accidental Compensation Surcharge' can't be termed as premium of general insurance for the following reason: i). There is no insurance policy issued by Corporation mentioning any conditions and circumstances under which Corporation has contracted with its passenger for its liability to indemnify in case of any loss. ii). Insurance premium is decided in direct relation with the amount of insured value. Against any paid premium, the insured person knows the coverage of insurance, which is not the situation in the instant case. There is no such correlation between the amount collected as 'Accidental Compensation Surcharge' and the amount of insured value. iii). There is no fixation of any maximum contracted obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assenger under respective heads of ticket are revised by the Government of Rajasthan. He also stated that while deciding the per km amount chargeable under different heads, Department of Transport, Government of Rajasthan do consider the actual cost incurred by the Corporation under respective heads. In the modern time, IT upgradation is a basic necessity, the associated fare as decided by the Government of Rajasthan is charged in the ticket issued by the Appellant. In the same manner, road accidents are too unavoidable to an extent. The cost associated with such accidents in form of compensation to the affected ones or under legal directions are huge in amount. Accordingly, the associated fare as decided by the Department of Transport, based on past cost incurred by the Corporation and other criteria as may be applicable, is charged in the ticket issued by the Corporation. He further submitted that as the passenger is availing the service of Stage Carriage only. The related costs incurred by the Appellant and as charged cannot be viewed separately from the absolute service required by the passenger. Amount collected under the head of IT, HR, ACS, etc., are purely inseparably integ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has not provided any service as per Section 65B (44). The service is provided by service provider against order for service by service receiver for a consideration. Unless service receiver orders for any service and agrees to pay consideration, there cannot be any service provided voluntarily. When, alleged benefits argued by the respondent are available to the service receiver under Motor Vehicle Act, 1988, without paying any amount, why such a passenger opt and pay for it. Since neither passenger has asked for any service nor appellant carried out any insurance activity for passenger for consideration, hence, the consideration is collected for the sole provision of service of transportation of passenger. 3.4 Ld. Counsel further submitted that in the present case, the period covered by the SCN is from April 2011 to March, 2015. The SCN was dated 02.12.2016. Thus the demand beyond the period April 2011 is barred by limitation. The extended period of limitation been invoked against the appellant on the basis that they have deliberately suppressed the facts from the Department. All the service tax returns were timely submitted and records are not private in nature. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice provided or to be provided to a policyholder or any person, by an insurer, including re-insurer carrying on general insurance business in relation to general insurance business . (iii) With effect from 01.07.2012 i.e. after introduction of negative list of services, as per Section 65 B (44) of Finance Act, 1994; the definition of the term 'services is as under:- service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (294) of article 366 of the Constitution, or (iii) a transaction in money or actionable claim (b) a provision of service by on employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force 4.1 Ld. Authorized Representative further contended that when the terms and conditions of the यात्र ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separately shown on the ticket but also separately shown in the books of accounts (profit loss account) as Operating Revenue . By mentioning the said surcharge separately on the tickets, a clear message is given to the passenger that their journey is insured against any accident/mis-happening. Thus there is a specific purpose to show the said surcharge separately on the tickets. Not only this the RSRTC also pays an interim relief to the injured/ victim and therefore passenger while paying surcharge, which is shown separately on the ticket, understands that his or her journey is insured and in case of any eventuality, they would be compensated by RSRTC. 4.2 Further, for the period prior to 1.7.2012, the services so provided by them which are in addition to the services of transport of passengers by Road were taxable service in terms of Section 65(105)(d) of the Finance Act, 1994 read with Section 65 (49) ibid under the taxable services of General Insurance Business. For the period post 1.7.2012, as per the definition of 'service', as given in Section 65B (44) of Finance Act, 1994, any activity carried out by a person for another for a consideration will be considered a taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or his property. In order to satisfy the conditions of a general insurance, the , यात्री दुर्घटना छतिपूर्ति योजना 2000 has to be a legal agreement between an insurer and the insurance company, whereby regular premium is paid for an assured sum in the event of any unfortunate eventuality. In the instant case, there is no insurance policy issued by Appellant mentioning any conditions and circumstances under which its passengers are assured for its liability to indemnify in case of any loss. In order to issue an insurance policy, the appellant should have to be licensed with the Insurance Regulatory and Development Authority (IRDA), in order to run business of insurance in India. The IRDA is an autonomous statutory body responsible for managing and regulating insurance re-insurance industry. Section 14 of the IRDA Act, 1999 lay down the duties responsibilities of the IRDA, which includes to regulate, promote ensure orderly growth of insurance re-insurance business. In this context, we reproduce the relevant sections 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is not restricted to passengers only, but includes any third person, who is not a passenger, but is a victim of an accident with the appellant's vehicle, consequent to the order of Court of law or under the policy. It has to be noted that such a victim/third party has not paid any amount of such 'surcharge'. Consequently, we hold that for the period prior to 1.7.2012, the accident surcharge collected by the appellant is not in the nature of premium and such activity of the appellant is not covered by the term general insurance , as defined in Section 65(49) of the Finance Act, 1994. Further, the transportation of passengers as stage carriage, was exempted Vide Notification No. 20/2009-ST dated 7th July 2009, for inter-state or intrastate transportation of passengers, excluding tourism, conducted tours, charter or hire service. Hence, no service tax was payable on such service as well. 5.2 As regards the period post 01.07.2012, we note that service tax was leviable on service, which means any activity carried out by a person for another for consideration, and includes a declared service . . In the instant case, the appellant carried out the service of transportation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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