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Landmark Service Tax Judgment - Insurance Auxiliary Services

Taxable Services - Insurance Auxiliary Services

Case Laws Related

  • STO 2013 CESTAT 1072
  • Insurance Service: Revenue should have led evidence to prove that there was payment made directly by PACL, Nayanangal and that those were consideration for service provided on which service tax was not paid.

  • STO 2011 CESTAT 119
  • Service Tax: Insurance Auxiliary Service: Pre-deposit: The definition contained under Section 2(1) (f) of IRDA, 99 clarifies that "Intermediary or insurance intermediary includes insurance brokers, reinsurance brokers, insurance consultant, surveyors and loss assessors". The issue being contentious, the assessees have not made out a prima facie case for total waiver of service tax. The appellants are directed to make predeposit of 25% of the tax demand within eight weeks from today. (para 2)

  • STO 2010 CESTAT 654
  • Service Tax: Insurance Auxiliary Services: The Iower appellate authority brands the services provided by the appellants as security service because of a single word "investigation" appearing in the contract. He has failed to appreciate that investigation has various of meaning and investigation in the context of insurance claims cannot make the service provided by the appellants into security services. (para 3)

    Service Tax: Insurance Auxiliary Services: Abatement : Remand: Accordingly, after setting aside impugned order, the appeal is allowed by way of remand to the original authority who shall allow a reasonable opportunity of hearing to the appellants and consider their claim for abatement with reference to the documentary evidence to be submitted by them. (para 4)

  • STO 2010 CESTAT 343
  • Service Tax: Cenvat Credit: Input Services: Insurance for Directors and Officers: Prima facie, the insurance cover has nexus with the business activity or output service, namely, ‘Trusteeship Services”. No reason to grant the prayer of the Revenue. The stay application is rejected.

  • STO 2010 CESTAT 354
  • Service Tax: Cenvat Credit: Input Services: Refund: In appeals filed by the Revenue, the grounds advanced pertain only to admissibility of Cenvat credit of tax paid on ‘Group Insurance Scheme. The Commissioner passed the impugned order relying on the decisions of this Tribunal which cover the dispute. These orders have not been stayed by any superior judicial forum. In the circumstances, any interference with the impugned order at this stage is not called for. (para 3)

  • STO 2010 CESTAT 288
  • Service Tax: Cenvat Credit : Tax paid on Insurance Services for insuring personnel:Stay Application: The impugned order was passed by the Commissioner (Appeals) following the Tribunal's decision in the case of Millipore India Ltd. Vs. CCE : STO 2008 CESTAT 638]and Endurance Systems India Ltd.: STO 2008 CESTAT 643], both of which had laid down that any expenses which formed part of the manufacturing cost as per the format prescribed in CAS-4 statement would qualify as input credit. The stay petition filed by the Revenue is rejected. (para 2)

  • STO 2009 CESTAT 1445
  • Service Tax: Demand: APTPC had advanced amounts to employees of various Government departments to finance purchase of consumer durables and two wheelers. The said activity is hire purchase finance, held to be not exigible to service tax by various judicial authorities including the Apex Court

  • STO 2009 CESTAT 51
  • Service Tax: Insurance auxiliary service: Issue - the service rendered by the assessee as reinsurance broker to the reinsurers and the reinsurance commission received by the assessee in Indian currency, was exigible to service tax under Section 65(105)(zl) read with Section 66 of the Finance Act, 1994 : Period 16.7.2001 to 30.6.2005 : Scope and liability: What is reinsurance - whereas insurance is a contract between the insurer and the insured, reinsurance is a separate contract between the insurer (the reinsured) and the reinsurer. These contracts are independent of each other. 'REINSURANCE' [4th Edition] authored by Robert Carter, Leslie Lucas and Nigel Ralph also says that a reinsurance contract constitutes a separate contract of insurance between 'the reinsurer' and 'the reinsured' and that it is not an assignment of all or any part of the rights and liabilities already existing under a contract of direct insurance. An original insurer arranges reinsurance with a reinsurer who accepts part of the risk of loss. An insurer may do this either directly or through an intermediary - insurance broker. The intermediary who negotiates contract of reinsurance on behalf of the reinsured, while receiving commission for placement and other services from the reinsurer, is called "reinsurance broker” and his remuneration for this service is called reinsurance brokerage or commission. According to Sec. 65(56) of the Finance Act, 1994, 'insurance intermediary' includes insurance brokers and reinsurance brokers. (Para 12). ‘Insurance' and 'Reinsurance' are independent contracts and that, in each of these, the transaction is between the insurer and the insured. The insurer and the insured under a contract of reinsurance are, respectively, called the reinsurer and the reinsured. It would follow that an 'insurer' defined under Section 65(58) also included a 'reinsurer'. In our considered view, the inclusion of 'reinsurer' in the definition of 'insurer' under Section 65(58) should be taken as express statement of the obvious. In other words, even without this amendment, the definition of 'insurer' was wide enough to include a 'reinsurer' and consequently 'insurance auxiliary service' concerning general insurance business, provided to a reinsurer by an intermediary or insurance intermediary or insurance agent was taxable under Section 65(105)(zl) of the Finance Act, 1994 prior to 1.5.2006.(Para 13).

    Period of limitation: The reinsurance brokerage received by the appellants was included in the taxable value of 'insurance auxiliary service' rendered by them to insurers (including reinsurers) for the purpose of payment of tax for the above period. According to the appellants, they did not suppress material facts before the Department. It is relevant to consider the Superintendent's letter dated 3.6.2008 addressed to the appellants. It appears from the above letter that the show-cause notice was issued and the same was adjudicated upon without gathering all the relevant facts for the period of dispute. In this scenario, the allegation of suppression of facts is not sustainable against the assessee. Consequently, the demand for the period beyond the normal period of one year preceding the date of issue of show-cause notice cannot be sustained. The learned Commissioner should requantify the demand accordingly. Penalties waived. Matter remanded.(Para 14).

    Appeal disposed off.

  • STO 2009 CESTAT 102
  • Service Tax: Insurance Auxiliary services, taxable w.e.f. 16.8.2002: Service tax on the renewal commission paid by Insurance Companies to their agents in respect of Insurance policies issued before 16.8.2002: Penalty u/s 76: Scope and liability: The appellants on their own had made a representation to the Board in September, 2003 seeking Board's clarification on several issues and one of the issue was as to whether the renewal commission paid to the agents after 16.8.2002 in respect of the policies issued prior to 16.8.2002 would attract service tax or not. Immediately on receipt of clarification from Board on 9th February, 2004. They paid the service tax in February, 2004 and thereafter paid the interest in September 2004. Since in this case, delay in payment of service tax on the renewal commission paid to the agents after 16.8.2002 in respect of the policies issued 16.8.2002 was on account of confusion on this point, provisions of Section 80 are applicable and therefore, no penalty is called for.(Para 5).

    Appeal allowed.

  • STO 2009 CESTAT 459
  • Service Tax: "Insurance Auxiliary Service" for the period Augu'02 to Sept'05: Liability of reimbursed expenses to agents: Scope: These are demands are on the reimbursements made by the appellants to their agents on actual basis towards office rent and salary of employees paid by the agents out-of-pocket. Circulars of the CBEC, issued from time to time, on the question whether allowances and reimbursements paid to LIC agents by the Corporation are liable to service tax in the aforesaid category clarified that out-of-pocket expenses of the agents, which are reimbursed on actual basis by the Corporation, are not to be included in the taxable value of "Insurance Auxiliary Service" for the purpose of payment of service tax. On this basis, there will be waiver of pre-deposit(Para 1,2).

    Stay granted.

  • STO 2008 CESTAT 125
  • Stay : Reimbursible expenses: Services of life insurance: CBEC in their letter dated 9-2-04 has given elaborate clarification with regard to deduction of certain expenses like travelling allowance etc. for service tax purposes. Prima facie, the issue is backed by Board’s clarification. Complete waiver granted.

  • STO 2007 CESTAT 501
  • Service Tax: Reinsurance brokers / Insurance Auxiliary Service: Scope: Apex Court's judgment in J.P. Boda and Co. Pvt. Ltd. v. Central Board of Direct Taxes [1996 (217) ITR (S.T.) 5] and the Tribunal's decision in PSA Sical Terminals Ltd. v. CC, Tuticorin STO 2003 CESTAT 111 wherein held that the reinsurance brokerage received in Indian rupee could be deemed to have been received in convertible foreign exchange. It is not in dispute that the brokerage was received in Indian currency. The question which now arises for consideration is whether the service, designated as "Insurance Auxiliary Service", was exported by them. In the Board's Circular, it was clarified that, even after rescission of Notification No. 6/1999-ST, export of service, otherwise taxable under the Finance Act, would be exempt from such tax. After a perusal of the Board's Circular and the relevant Notification No. 6/1999-ST 09.04.1999 and after consideration of the Export of Service Rules, 2005, there is a good case for the appellants. The tenor of the provisions appears to be that there shall be no service tax on export of services, irrespective of the manner in which consideration for the service is received by the service provider. It is not in dispute in the present case that the service recipients are resident abroad and have no office in India.(Para 3)

    Pre-deposit waived, stay allowed.

  • STO 2007 CESTAT 44
  • Service Tax: Liability of service tax for target incentives etc., gifts in cash and kind, trips to abroad given to the Insurance Agent: Scope and liability: Such gifts and target incentives are not includable in the value of the Insurance Auxiliary Services received by them, in the light of the Tribunal's decision in the case of M/s. Euro RSCG Advertising Ltd. and M/s. Marketing Consultants & Agencies Ltd. v. Commissioner of Service Tax, Bangalore reported in STO 2006 CESTAT 387 holding inter alia that target incentives are not connected to service rendered to the clients nor billed to the clients and, therefore, are not liable to service tax.(Para 2).

    Pre-deposit waived.

     
     

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