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2014 (8) TMI 298 - AT - Service TaxCENVAT Credit - input service - Tax paid on re-insurance service - credit denied on the ground that reinsurance takes place after the insurance business is effected - Held that:- Since reinsurance is a statutory obligation and the reinsurance is coterminous with the insurance policy, stand taken by the Revenue that the transfer of a portion of the risk to the reinsurer which is all the reinsurance means has to be considered as having a nexus with the output service namely provision of insurance to the customers - percentage of insurance to be reinsured is directly connected to the premium collected from the persons who are insured with insurer and it is basically transfer of a portion of the risk and therefore it can be definitely said that the reinsurer is providing the service to the insurance company when he accepts to reinsure a portion of the insurance undertaken by the insurer. Therefore, impugned order cannot be sustained on merits. - Decided in favour of assessee.
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