TMI Blog2018 (10) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... ataka in case of Commissioner of Service Tax, Bangalore Vs PNB Metlife Insurance Co. Ltd. [2015 (5) TMI 68 - KARNATAKA HIGH COURT], where it was held that the transfer of a portion of the risk of the re-insurance has to be considered as having nexus with the output service, since the re-insurance is a statutory obligation and the same is co-terminus with the Insurance Policy - credit rightly availed. Demand of ₹ 37,83,124/- - excess paid Service Tax was utilized by them for payment of their Service Tax liability for the month of November, 2007 and during the month of January and March, 2008 - Held that:- If any excess payment of service tax has been made by the appellant, they are certainly entitled to make adjustment of same in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and same are independent of each other. It has further been contested by the department that since any particular contract cannot be assigned to any part of a particular right of liability which are already existing towards appellant under a contract for direct insurance and, therefore, the re-insurance did not appear to the department to be an essential input for providing insurance services and accordingly they entertained a view that the same does not fall under the category of Input Service in view of the definition of Input Service given under Rule 2(a) of the Cenvat Credit Rules, 2004. Accordingly, a service tax demand of ₹ 33,69,617/- have been issued under Section 73 of the Finance Act, 1994 on this issue. 2. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of a portion of the risk to the re-insurer which is of the re-insurance means has to be considered as having an excess with the output service, namely, provision of the insurance to the customers. We take note of the fact that percentage of insurer to be re-insured is directly connected to the premium covered from the persons who are insured with the insurer and it is basically transfer of a portion of the risk and, therefore, it can definitely be shared that the re-insurer is providing the service to the insurance company undertaken by the insurer. The Tribunal was, therefore, of the view that the Service Tax paid on the re-insurance premium is certainly a part of the input service to the appellant and, therefore , it has categoric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal and Hon ble High Court of Karnataka in case of Commissioner of Service Tax, Bangalore Vs PNB Metlife Insurance Co. Ltd. [Civil Appeal No. 56/2014 dated 9.4.2015]. The relevant extract of the above judgement are reproduce below: 6. Having heard the ld counsel for the parties and in the face of this case, we are of the opinion that the order of the Tribunal does not require any interference. Rule 2(i) of the CENVAT Credit Rules, 2004 provides that Input Service means service used by a provider of taxable service for providing an Output Service . The submission of the learned counsel for the appellant that once the Insurance Policy is issued by the Insurer, the transaction comes to an end and would not depend on the re-in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice rendered and the provision of giving the CENVAT credit is so that there may not be double taxation. If a person has collected service tax, no doubt the same has to be despatched, but if in the process of the same transaction he has paid some service tax, which is necessary for its business, then he is entitled to the CENVAT credit to the extent of service tax which has been paid by it. In the present case, if the entire Service Tax which is collected by the Insurer, while selling its insurance policies, has to be deposited without being given the credit of the tax which is paid by it while procuring a policy of re-insurance as (mandatorily required in law), the same would be against the ethos of CENVAT credit po0licy, as the same woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant, they are certainly entitled to make adjustment of same in their liability of subsequent months as per the provisions of Service Tax Rules, however, this only needs meticulous verification of challans / payments and ST -3 returns at field level. We find that the Commissioner has not applied his mind on this and routinely confirmed the demand of service tax without getting the claim of the appellant verified. 9. We, therefore, remand back the matter to original adjudicating authority only with regard to the second demand of ₹ 37,83,124/- for necessary verification of the claim of the appellant and accordingly decided the same on the merits. 10. In view of the above, the appeal is partly allowed and part of the appeal is all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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