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2015 (9) TMI 1219 - HC - Service TaxInsurance as well as reinsurance broker – international insurance - service providers situated abroad - import of services and / or export of services - reinsurance brokerage was not included in the taxable value of ‘insurance auxiliary service’ rendered to insurers/reinsurers for the disputed period. - reverse charge - effective date of levy. Held that:- Net premium payable by the New India Assurance Co. Ltd. to the reinsurer in London is ₹ 2,101,200/-. After extending the benefit of 10% commission, the net premium due to Heath Lambert Limited comes to ₹ 18,91,080/-. Under the terms of contract, for providing the service as re-insurance broker, which fact is not disputed, a sum of ₹ 16,18,960/- alone is remitted to M/s.Heath Lambert Group as client money as set out by the assessee in the letter to the Chief Manager, Bank of India, Overseas Branch, Chennai dated 25.1.2006 as net premium, retaining the balance amount as commission/brokerage. This transaction is illustrative of series of transactions which had taken place over the period in dispute in the show cause notice. In effect, in respect of remitting the entire amount to the re-insurer and getting the brokerage separately, the assessee, in this case, in relation to the trade practice prevalent in the trade internationally and following the practice and procedure that is followed by the re-insurance brokers with the reinsurance companies, the assessee had retained that portion of the commission or brokerage and remitted the balance to the re-insurance company at London. Services rendered by the assessee in this case to the re-insurer abroad and the transaction with the foreign re-insurer would have to be necessarily accepted as 'export of service'. Once we hold that it is export of service, we will now look into the provisions of the Service Tax Act. - Decision in the case of JB Boda & Company Private Ltd. [1996 (10) TMI 70 - SUPREME Court] followed. - Decided in favor of assessee. Insofar as Notification Nos.6/99 dated 09.04.1999 and the rescinding Notification No.2/03 dated 01.03.2003 and the subsequent Notification No.21/03 dated 20.11.2003 are concerned, though relied upon by the assessee at the first instance in the light of J.B.Boda's case, we feel that may not be really necessary to resolve the issue raised in the present case, as all these Notifications granted exemption from payment of service tax to any person, in respect of which payment is received, specified under sub-section (48) of Section 65 of the Finance Act provided, to any person, in respect of which payment is received in India in convertible foreign exchange from whole of service tax. Role of the assessee is collecting and remitting the premium. There is also a commitment on the part of the assessee in relation to any claims that may arise from New India Assurance Co. Ltd. in respect of re-insurance contract. IRDA (Insurance Brokers) Regulations further casts a duty on the assesee as to how the money collected in relation to the re-insurance contract should be dealt with by the broker. The terms contained in Regulation 23 speaks for itself that the role of the assessee as an insurance broker is not merely receiving and transmitting the amount as has been propounded by the Adjudicating Authority and the Tribunal. There is much more to be done by the Insurance broker even as per the IRDA (Insurance Brokers) Regulations, of which much emphasis has been made by the Tribunal in paragraph No.15. If this is the role of the assessee, we fail to understand how the Tribunal could have said that it is just forwarding the premium amount to the re-insurer company. That finding, of the tribunal in confirming the demand, is a fallacy in the light of the findings given by the Supreme Court in JB Boda's case (supra), as also the provisions of the Service Tax Act, more particularly, the binding circular of the Reserve Bank of India dated 25.4.2003. On the issue of non-receipt of the commission or brokerage in convertible foreign exchange, the Adjudicating Authority as well as the Tribunal have time and again misdirected themselves to hold that since the New India Assurance Co. Ltd. have paid the premium amount, it cannot be treated as receipt of amount in convertible foreign exchange and for this, Mr.M.Santhanaraman, learned Standing Counsel appearing for the Department submitted that there is no specific agreement as in the case of J.B.Boda (supra) and therefore, it stands distinguished. Under RBI Regulations, there was a requirement of such an agreement under law and the permission of the RBI has to be obtained before remitting the foreign exchange. That issue does not arise in the present case and the provisions of the Service Tax Act does not impose such a condition. In any event, as we have held that the basis of the circular, which is clarified that Notification Nos.6/99 dated 09.04.1999, 9/01 dated 16.07.2001, 13/02 dated 01.08.2002 and 2/03 dated 01.03.2003 would not apply to export of service, the question of receiving the payment in convertible foreign exchange does not arise. Even the Export of Service Rules, 2005 does not put an embargo in relation to taxable service as specified in Rule 3(3)(i), (ii) and (iii) of the Export of Service Rules. - Decided in favour of assessee.
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