TMI Blog2021 (7) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... ctification proceedings that taxability under one of the enumerations in section 65(105) of Finance Act, 1944 appeared to have been considered in the decision of the Tribunal that ruled in favour of the assessee. Rectification that calls for recall remains as under disposal and attains consummation with substitution of the recalled order. It would be presumption for Learned Authorised Representative to conceive that such recall must, inevitably, lead to a contrary opinion on the part of the Tribunal - Mere reference to the recalled decision does not, ipso facto, render the finding to be bereft of value as precedent. Reliance placed in the case of SHRIRAM LIFE INSURANCE COMPANY VERSUS CC, CE ST, HYDERABAD IV AND CC, CE ST, RANGAREDDY GST (VICE-VERSA) [ 2019 (2) TMI 868 - CESTAT HYDERABAD] where it was held that the transaction in question is not a service at all but the transaction in a actionable claim hence could not have been by any stretch of imagination covered under any of the specified taxable heads of service even for the period prior to 01.07.2012 - the demand of service tax on the surrender charges for the period in question is unsustainable. Appeal allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived from the policyholder in relation to providing of management of investment under the ULIP scheme of the appellant. The exemption accorded to the said business immediately following the incorporation of the taxable service in 2002 came a full circle with the deletion of in relation to the risk cover in life insurance along with amendment of rule 6 (7A) of Service Tax Rules, 1994 vide notification no 35/2011-ST dated 25th April 2011. 4. The coverage of risk to life which was subjected to tax from 10th September 2004 is not in dispute. The unit linked insurance policy (ULIP) , offering risk cover as well as eventual return from investment of that, or part of, portion of the premium not attributable to risk, was brought entirely under the tax net with effect from 16 th May 2008 but owing to the bar of limitation in section 73 of Finance Act, 1994, the notice dated 2nd October 2014 was restricted to the surrender value of ₹ 50,91,12,094 retained by the appellant between April 2009 and June 2012 with the period from July 2010 to April 2011 excluded. 5. Service tax authorities attributed the retained amount to consideration for rendering of management of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT-MUM] did also hold so but, having fairly conceded that the said decision had been recalled while disposing off application for rectification of mistake filed by Revenue, preferred not to indulge in other than passing mention as the appeal of assessee against the recall was, as yet, pending before the Hon ble High Court of Bombay. 7. Placing particular emphasis on the circular issued by the regulatory authority for the insurance sector, Learned Authorized Representative took us through the several definitions and provisions therein in support of his contention that the option of surrender arises only after crossing the threshold of lock in period and that the computation, being based on the quantification of surrender value , is not to be construed as a penalty but, as apparent from the nomenclature itself, as a charge which is nothing but consideration for concession proffered by the appellant; in support, he cites regulation no. 5 of Insurance Regulatory and Development Authority (Treatment of Discontinued Linked Insurance Policies) Regulations, 2010 wherein the pre-requisites for exercise of option upon discontinuance have been stipulated. Finally, according to him, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be subject to tax then notwithstanding the deferment of consideration till the surrender of policy. There would, thus, be no reason for surrender of the policy to be the trigger for discharge of duty liability with failure thereto empowering proceedings under section 73 of Finance Act, 1994. 10. In re Shriram Life Insurance Company, the Tribunal examined the nature of surrender charge before concluding that 11 In our view, the amounts entered as surrender/discontinuance charges in the appellant assessee s books of accounts are not consideration for any service rendered by them, but it represents the amount that is retained by insurer on the insured, exercises the right to receive the insurance money. The entirety of the transaction being that in actionable claim is outside the purview of the service tax and does not get covered under provisions of Finance Act, 1994. 12. While, it is true that the expression of Service under Section 65B(44) only w.e.f. 01.07.2012, however, even for the period prior thereto the transaction in question is a actionable claim and not a service it has to be also noted that for the period prior to 01.07.2012, for an activity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010. 12. In view of the conclusions in these decisions combined with our own observation supra, we find ourselves unable to be persuaded that a contrary view may have acceptance; more so, as Learned Authorized Representative has not been able to enlighten us with statute and precedent that may have been of assistance. His arguments, insofar as the decisions are concerned, is limited to these having followed the order of the Tribunal, now recalled, in re Reliance Life Insurance Company Ltd and that the first of the two cited decisions, pending before the Hon ble Supreme Court on appeal of Revenue, was in jeopardy as held by the judgement of the Hon ble Supreme Court in Union of India v. West Coast Paper Mills Ltd [2004 (164) ELT 375 (SC)] as was the decision of the Tribunal in re Reliance Life Insurance Company Limited in appeal before the Hon ble High Court of Bombay. 13. We find that the recall order was actuated by the merit of the plea in rectification proceedings that taxability under one of the enumerations in section 65(105) of Finance Act, 1944 appeared to have been considered in the decision of the Tribunal that ruled in favour of the assessee. Rectification that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but its assistance to the proposition of Revenue is not immediately obvious. 8. The architecture of appellate ascendance under Customs Act, 1962, and replicated in Central Excise Act, 1944 as well as in Finance Act, 1994, leads all the way to the highest court in the land as a statutory prerogative and the trajectory of the argument of Learned Authorized Representative would have it that, in the event of appeal before superior fora, inferior appellate bodies are not bound by their own rulings, even if in identical circumstances, and in disputes of the very same assessees. That surely goes against the grain of judicial consistency and cannot but contribute to erosion of the ideal of tax certainty. It would, therefore, appear that the context in which the Hon ble Supreme Court did make that observation supra has been glossed over in the attempt to persuade us to discard some of the decisions of the Tribunal. 9. The dispute in re West Coast Paper Mills Ltd arose from a commercial engagement of the respondents therein with Indian Railways, as carrier of freight, that, having been placed before the Railway Rates Tribunal following revision of rates on 1st February 1964, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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