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2018 (4) TMI 1407 - CESTAT MUMBAIManagement of Investment under Unit Linked Insurance Plan (ULIP) - surrender/ partial withdrawal charges - case of Revenue is that these charges are recovered to cover the past expenses incurred towards provision of services and hence liable to tax - Held that: - the ULIP is primarily a contract between the insurer and insured and thus when seen in the context of Section 73 and 74 of the Contract Act, 1872, what transpires is that surrender of policy is nothing but ending of contract for which compensation in the form of damages which cannot be termed as charges towards management. Reference made to Circular No. 94/5/2007 – ST dt. 15.05.2007, wherein the entry and exit load charges of the Mutual fund were held not to chargeable to tax as they are not towards fund management service. To retain the container beyond the pre-holding period is neither a service provided on behalf of the client(Business Auxiliary Service) nor is it an infrastructural support in the business of either the shipping lines or the customer (Business Support Service). Such charges can at best be called as ‘penal rent’ for retaining the containers beyond the pre-determined period. Therefore, the amount collected as ‘detention charges’ is not chargeable to service tax. The surrender charges are not part of taxable service of management of funds. Rather it is in the nature of penalty or liquidated damages which is not a service and hence cannot be made liable for tax during the period involved - demand cannot sustain. Time limitation - Held that: - the demand is also time barred as the issue involved is of interpretation and therefore no element of suppression, fraud or intention to evade taxes can be made against Appellant - information of surrender charges stands disclosed in books of accounts and also in Balance Sheet as per the directions of IRDA. Hence it is not a case of suppression - extended period not invoked. Appeal allowed - decided in favor of appellant.
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