Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2019 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (8) TMI 967 - AT - Service TaxLevy of service tax - Management of Investment under ULIP service - Surrender Charges, which are deducted from fund value, as per policy provisions for pre-mature withdrawal from the scheme - Link between consideration and taxable event - extended period of limitation - HELD THAT:-The surrender charges are permitted to be levied by IRDA, by way of penal charges towards recovery of initial expenses incurred by the insurer in marketing and distribution of the policy. As IRDA has fixed limits as to recovery, which can be made from time to time from the initial cost, accordingly, IRDA have permitted to recover surrender charges in case of pre-mature policy, as per the table given hereinabove, so as to enable the insurer to recoup the cost incurred by them. Further, the legislature have clarified by substituting clause (ii) in Explanation to Section 65(105)(zzzzf), clarified that service tax is leviable only on the management fee or charges which are either fixed by IRDA or actually levied by the insurer, whichever is higher by substituting the explanation w.e.f. 01.07.2010. An Explanation is meant for clarifying the provision of the main section and accordingly has retrospective effect and is normally effective from the date of the statute, unless otherwise provided in the amending Act or notification - the clarification by way of substitution of Explanation-II, service tax is not leviable on surrender charges by any stretch of imagination. It has also been clarified by the CBEC vide TRU No. 334/1/2010, that the charge pertaining to asset management alone should form the value for taxation in case of ULIP policy. Accordingly, we hold that no service can be leviable for the period 2011-12 also as surrender charges towards renting of service being penalty. Appeal allowed on merits itself.
|