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2020 (9) TMI 355 - AT - Service TaxCENVAT Credit - input services - services of insurance agents when portion of premium amount (consideration towards output service) - reverse charge mechanism - service not liable to tax - credit has been denied solely on the premise that the insurance service (for sale of ULIP policies) is exempted service, since no service tax is paid on the premium pertaining to the investment component - HELD THAT:- The Ld. Commissioner committed a fundamental error in assuming that the sale of ULIP policy by the appellant results into provision of exempted service. We are of the considered view that the appellant is only engaged in rendering the insurance services and merely for the reason that portion of the premium amount charged in respect of ULIP policies is not liable to tax, it cannot be said that the said service is exempted output service when tax is duly paid on the portion of premium collected on risk coverage. Merely for the reason that the break-up of premium amount is shown in the policy, the fact that remains is that the policy is one and single with the feature of both risk coverage and investment opportunity simultaneously. It cannot be said that the ‘insured’ i.e. the subscriber to the policy has availed two separate policies. Neither there can be a question of extending the facility for subscribing to ULIP policy with only the investment portion, excluding the risk coverage and vice versa. Since no exempt service has been provided by the appellant, there is no application of Rule 6 of the Credit Rules in the instant case to deny the credit. Moreover, since there is no dispute that the services of insurance agents have been used in providing output service, the said service constitute eligible ‘input service’ under Rule 2(l) and therefore, service tax paid thereon is clearly eligible for credit in the hands of the appellant. The impugned demand of service tax along with interest and penalty cannot be sustained and hence, set aside in entirety - Appeal allowed - decided in favor of appellant.
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