TMI Blog2019 (2) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... nts attributable to managing the investment of the policy holder are liable to be taxed under taxable head in the life insurance services, as specified in Section 65(105)(zx) of the Finance Act, 1994 - Indian Insurance Company like the assessee could only be undertaking life insurance business, it is also clear that investment in securities is an obligation that the insurer has to fulfil in order to render the life insurance services. Any insurance company which does not comply the requirements under the Insurance Act to undertake specified investments, could be disqualified from undertaking right insurance business. It is also clear from the amendment to the definition of taxable service under the head “Life Insurance Service” under the Finance Act, 1994, w.e.f. 01.05.2011, the premium attributable to the risk in life as also managing to investment was taxable. The investment activity undertaken by the appellant assessee is an integral part of life insurance service and cannot be divested from the same. As the service being rendered by the appellant is that of life insurance, which is a taxable service, it cannot be said that appellant is rendering any exempted service - even o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Counsel appearing for the appellant assessee draws our attention to entire case records and to the provisions of the Insurance Act 1938 and submits that as an Indian Insurance Company, the appellant assessee could only have conducted the life insurance business and that under the Insurance Act, it was mandatory on its part to invest the funds in their hands, in approved securities of a value which is not less than the sum of its current and expected future liabilities towards its policy holders. It was also submitted that under the Insurance law, all the funds available with the insurer which are nomenclated as Controlled Funds have to be necessarily invested in specified investment instruments including securities, was also submitted that w.e.f. 01.05.2011, the premiums attributable to risk cover as also the fees for managing investment of the policy holder was being subjected to tax. It is his further submission that the investment activity besides being mandatory and an integral part of the insurance business, was also a service on which service tax being paid by the assessee as a part of life insurance services. It is his submission that since the entirety of service was be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the submissions made by both sides, we find that undisputedly, the appellant assessee is an Indian Insurance Company licensed by Insurance Regulatory Development Authority of India (IRDAI) to carry only on life insurance policies. The definition of Life Insurance Business in Section 2 (11) of the Insurance Act, 1938 along with its explanation is reproduced: life insurance business means the business of effecting contracts of insurance upon human life, including any contract whereby the payment of money is assured on death (except death by accident only) or the happening of any contingency dependent on human life, and any contract which is subject to payment of premiums for a term dependent on human life and shall be deemed to include- (a) the granting of disability and double or triple indemnity accident benefits, if so provided in the contract of insurance; (b) the granting of annuities upon human life; and (c) the granting of superannuation allowances and annuities payable out of any fund applicable solely to the relief and maintenance of persons engaged or who have been engaged in any particular profession, trade or employment or of the dependents o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x net since 2008. 9. In pursuance or the provisions, appellant assessee has accordingly been, undisputedly, discharging the tax liability on the premiums collected by them towards different life insurance policies issued by it, details are as under: (a) Traditional Policies, power risk insurance policies on which service tax liability is discharged at the applicable rate on the entire premium collected. (b) Participating/non-participating policies (endowment policies) on which appellant discharged service tax @ 1.5% of the gross premium charged in terms of Rule 6 (7A) of Service Tax Rules, 1944. (c) Appellant discharged service tax on the gross premium charged from an Unit Linked Insurance Policy holder, reduce by the amount allocated for investment or savings on behalf of the policy holder as per provisions of Rule 6 (7A) of Service Tax Rules at the applicable rate. The above position is not disputed in the entire impugned order. 10. It can be seen from the provisions of Insurance Act, as has been referred herein above, Indian Insurance Company like the assessee could only be undertaking life insurance business, it is also clear that investment in securities is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or (ii) Service, on which no service tax is leviable under section 66(B) of Finance Act; or (iii) Taxable service whose part is exempted on the condition that no credit on input and input services used for providing such taxable services shall be taken but shall not include the service which is exported. 13. The definitive meaning attributable to the above would mean that an exempted service means no tax should have been leviable on the same and a person undertaking trading of securities on his own account does not discharge any tax qua other activity. However, under the Finance Act, 1994, insurer is not only liable to service tax of that portion of the premium which is attributable to risk in life covered by the insurer but also towards the charges attributable to investment activity; this position is acknowledged by CBEC vide circular No. 334/3/2011-TRU, dated 28.02.2011. In the case in hand, as the activity of managing investments suffers service tax liability under life insurance services, the same cannot be said to be an exempted service, warranting reversal of CENVAT Credit under Rule 6 of CENVAT Credit Rules 2004. 14. The judgment of Hon ble High Court of Madra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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