TMI Blog2020 (10) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been isolated for tax till 1st May 2011 is also not tenable; this should have been amply evident from the absence of a new entry to describe such service identified for levy of tax. Neither does the tax on management of segregated fund in section 65 (105) (zzzzf) of Finance Act, 1994 with effect from 16th May 2008 obtain support for it as this freshly incorporated taxable service is a fiction designed by law through a deeming provision. Hence, it is abundantly clear that the expansion of the taxable value through the two amendments supra did not bring new services into existence. Even if it did, the subsequent existence of such service could not enable assumption that these were exempted till then. From application of the definition of exempted services in rule 2 (e) of CENVAT Credit Rules, 2004, to the facts leading to the impugned order, there are no doubt that the amendments in section 65 (105) of Finance Act, 1994 in relation to endowment policies and unit linked insurance plan (ULIP) policies cannot be held to have established exempted services warranting any restriction on availment of CENVAT credit of input services as provided for in the rule 6 of CENVA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um paid by the policyholder was assigned for generating returns by investment in pre-determined portfolios for returns, that part of the consideration for service provided, or agreed to be provided, (zzzzf) to a policyholder, by an insurer carrying on life insurance business, in relation to management of investment, under unit linked insurance business, commonly known as Unit Linked Insurance Plan (ULIP) scheme was, by incorporation with effect from 16th May 2008 in section 65 (105) of Finance Act, 1994, rendered liable to tax. It was in these circumstances that the service tax authorities contended that, for the entire period of dispute, the portion of the premium, other than towards risk cover , paid by holders of endowment policy and the portion of the premium paid by holders of unit linked insurance policy (ULIP) other than towards risk cover between 1st April 2008 and 15th May 2008, was consideration for exempted services and that credit of tax paid on several input services utilized in common for rendering of both taxable and exempted services was required to be adjusted accordingly. 3. Learned Chartered Accountant contends that the recovery does not ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order, he urged us to dismiss the appeal. 6. It would appear from the impugned order, as well as the contentions advanced by Learned Authorized Representative, that recovery has been premised on the hypothesis that subsequent inclusion of a portion of the consideration, hitherto excluded, in the assessable value by expansion of definition of taxable service or by fresh enumeration unveils the existence of exempt service for which consideration has been received by the provider of service. Ex facie, this proposition is liable to be rejected for it rides on retrospective application to deny credit; unveiling of the past from a subsequent enactment to foist detriment on tax assessees is not within the empowerment of tax administration. Neither is such a test for coverage within exempt service enjoined by law. Considering that it has been held in Indian National Shipowners Association and Anr v. Union of India and Ors [(2009) 4 AIR Bom R 775] by the Hon ble High Court of Bombay, and duly affirmed by the Hon ble Supreme Court in Union of India v. Indian National Shipowners Association and Anr [2010 (14) SCC 438], that no taxable service can, by inference, be presumed to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , subject the taxability thereof to constitutional validity. That an amount from the consideration was added to the taxable component will not suffice as the epiphany of a new taxable event. 16. At the same time, the presumption against superfluity in interpretation of statutes binds us to search for, and determine, the nature of inclusion. As we are dealing with the schema of mechanism for avoiding the cascading effect of taxation upon the final customer who bears the burden of indirect tax levy, it can be posted that there is a recipient of service with whom the buck stops. Such stoppage could be owing to lack of further commercial engagement of the service or because of the non-existence of such service within the jurisdiction to tax. Tax laws have nothing to do with the last consumer in the market chain. It would, therefore, leave us with no option but to determine that legislative intent of services that are not leviable to tax under section 66 of Finance Act, 1994 to be those to which the Union cannot extend its taxing arm. The exclusion of a portion of the consideration in providing works contract service under section 65(105)(zzzza) of Finance Act, 1994, as elabora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mere fact that service tax was payable on the part of the value of these services subject to tax, that part of the value on which tax being levied cannot be said to be an exempt service. 9. Likewise, in re Max New York Life Insurance Co Ltd, the Tribunal was of the view that 8. We note that in the present arrangement the appellant assessee is providing Service of ULIP for the insured. For such service, the tax is paid. There is no separate identifiable service attributable to investment portion of the premium in the present case. In other words the premium amount received was invested substantially and for managing such investment, administration charges are collected and Service Tax date. No other service, least of all exempted service, could be identified in such arrangement. 10. From application of the definition of exempted services in rule 2 (e) of CENVAT Credit Rules, 2004, as determined in these several decisions supra to the facts leading to the impugned order, we have no doubt that the amendments in section 65 (105) of Finance Act, 1994 in relation to endowment policies and unit linked insurance plan (ULIP) policies cannot be held to have establis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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