9911796707
TMI Blog2024 (7) TMI 1458X X X X Extracts X X X X X X X X Extracts X X X X ..... passengers by stage carriage services both within Rajasthan and its neighbouring States. The appellant is registered with Service Tax Department having Service Tax Registration No. AABCR7187BST002 under the taxable services categories of Tour Operator/BAS/Renting/Sale of Space/BSS. The Stage carriage buses are arranged in public interest to fulfill the need of general public. Such buses stops, unloads and picks up passengers on various stations as per requirement. The appellant is created under the powers conferred by Section 3 of the Road Transport Corporation Act, 1950 (Central Act 64 of 1950), read with Section 5 thereof, by the State Government. In the provision of the service of transportation of passengers, there are several possibilities of an accident or damage by the Appellant's vehicle. Any compensation payable to the affected ones out of social or legal obligation are additional cost of operation on the Appellant. The appellant also has legal obligations created under Motor Vehicle Act, 1988, at the same time wherein related costs have to be borne. 2.1 The Rajasthan Government Transport Department vide its notification approved the collection of Accidental Compensat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present appeal. 3. Learned Counsel for the appellant submitted that it has been wrongly alleged that the appellant was providing the service of 'General Insurance Business'. He contended that without registering with Insurance Regulatory and Development Authority (IRDA), no person is permitted to run business of insurance in India. Insurance is the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment of premium. The insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to indemnify the insured in the case of a financial / personal loss arising from the insured risk. The insured receives a contract, called the Insurance policy, which details the conditions and circumstances under which the insured will be financially compensated. The ld counsel submitted that the collection of the 'Accidental Compensation Surcharge' can't be termed as premium of general insurance for the following reason: i). There is no insurance policy issued by Corporation mentioning any conditions and circumstances under whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jasthan), near to its actual cost of operations. In provision of the main service of transportation of passengers, the Corporation issues a ticket to its passengers and recovers the cost of its operations. The ticket carries the amount under various heads viz. Fare, Accidental Compensation Surcharge, IT, HR, etc. These heads are stated separately for the convenience of accounting, internal reporting and its respective utilization under respective heads. Based on such separate compilation of information, the amount chargeable to passenger under respective heads of ticket are revised by the Government of Rajasthan. He also stated that while deciding the per km amount chargeable under different heads, Department of Transport, Government of Rajasthan do consider the actual cost incurred by the Corporation under respective heads. In the modern time, IT upgradation is a basic necessity, the associated fare as decided by the Government of Rajasthan is charged in the ticket issued by the Appellant. In the same manner, road accidents are too unavoidable to an extent. The cost associated with such accidents in form of compensation to the affected ones or under legal directions are huge in am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ange by the State Government. The collection of "Accidental Compensation Surcharge" is integral part of the total fare charged by the Corporation for the provision of the service as Stage Carriage. Corporation is not an insurance company and is not providing any service of insurance to its passengers. As the service of Stage Carriage was duly exempt from service tax during the said period, there is no service tax payable by the Corporation. Thus, the allegation of the Commissioner is not legally tenable. He further submitted that the appellant has not provided any service as per Section 65B (44). The service is provided by service provider against order for service by service receiver for a consideration. Unless service receiver orders for any service and agrees to pay consideration, there cannot be any service provided voluntarily. When, alleged benefits argued by the respondent are available to the service receiver under Motor Vehicle Act, 1988, without paying any amount, why such a passenger opt and pay for it. Since neither passenger has asked for any service nor appellant carried out any insurance activity for passenger for consideration, hence, the consideration is collected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o it in clause (g) of Section 3 of the General Insurance Business (Nationalization) Act, 1972(57 of 1972). The same reads as under: "General insurance business means fire, marine or miscellaneous insurance business, whether carried on singly or in combination with one or more of them, but does not include capital redemption business and annuity certain business." (ii) The taxable service in respect of general insurance business was defined under Section 65(105)(d) of the Finance Act, 1994, which read as under: "taxable service means any service provided or to be provided to a policyholder or any person, by an insurer, including re-insurer carrying on general insurance business in relation to general insurance business". (iii) With effect from 01.07.2012 i.e. after introduction of negative list of services, as per Section 65 B (44) of Finance Act, 1994; the definition of the term 'services is as under:- "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtue of scheme contained in " , 2000, the RSRTC have collected consideration, in the name of accidental compensation surcharge separately from fare, from their passengers for accidental compensation. Obviously RSRTC were under obligation to compensate the passengers or third party in case of any mis-happening, therefore, both the ingredients namely provision of service and consideration are present in this case. The appellant has argued that the surcharge in question is a part of fare. But this argument is very feeble for the reason that said surcharge is not only separately shown on the ticket but also separately shown in the books of accounts (profit & loss account) as "Operating Revenue". By mentioning the said surcharge separately on the tickets, a clear message is given to the passenger that their journey is insured against any accident/mis-happening. Thus there is a specific purpose to show the said surcharge separately on the tickets. Not only this the RSRTC also pays an interim relief to the injured/ victim and therefore passenger while paying surcharge, which is shown separately on the ticket, understands that his or her journey is insured and in case of any eventuality, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce covers all types of insurance, other than life Insurance. We now take up the term insurance: According to popular understanding, insurance is a legal agreement between an insurer (insurance company) and an insured (individual), in which an insured receives financial protection from an insurer for the losses he may suffer under specific circumstances. Under an insurance policy, the insured needs to pay regular amount of premiums to the insurer. The insurer pays a predetermined sum assured to the insured if an unfortunate event occurs, such as death of the life insured, or damage to the insured or his property. In order to satisfy the conditions of a general insurance, the , "यात्री दुर्घटना छतिपूर्ति योजना 2000" has to be a legal agreement between an insurer and the insurance company, whereby regular premium is paid for an assured sum in the event of any unfortunate eventuality. In the instant case, there is no insurance policy issued by Appellant mentioning any conditions and circumstances under which its passenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no assured sum being given to all the passengers who are traveling in the buses of the appellant. Further, there is no correlation between the amount collected as 'Accidental Compensation Surcharge' and the amount of insured value. Also, there is no fixation of any maximum contracted obligation on the appellant at the time of collection of such 'Surcharge'. We also note that the liability to pay compensation, if any, is decided as per their "Passenger and Third-Party Accidental Compensation Policy-2000" or by the Court of law under Motor Vehicle Act 1988, which varies from case to case. We take note that such compensation is not restricted to passengers only, but includes any third person, who is not a passenger, but is a victim of an accident with the appellant's vehicle, consequent to the order of Court of law or under the policy. It has to be noted that such a victim/third party has not paid any amount of such 'surcharge'. Consequently, we hold that for the period prior to 1.7.2012, the accident surcharge collected by the appellant is not in the nature of premium and such activity of the appellant is not covered by the term 'general insurance', ..... X X X X Extracts X X X X X X X X Extracts X X X X
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