Custom, Excise & Service Tax Tribunal
Pnb Metlife India Insurance Company Ltd vs Commissioner Of Central ... on 7 May, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order . 20719 / 2014 Application(s) Involved: ST/Stay/21160/2014 in ST/21038/2014-DB Appeal(s) Involved: ST/21038/2014-DB [Arising out of order-in-original No. 09-2013 dated 02/12/2013 passed by the Commissioner of Central Excise, Customs and Service Tax(Adjudication) , BANGALORE-ADJUDICATION ] Pnb Metlife India Insurance Company Ltd Brigade Seshamahal, 5, Vanivilas Road, Basavanagudi, BANGALORE - 560004 KARNATAKA Appellant(s) Versus COMMISSIONER OF CENTRAL EXCISE,SERVICE TAX AND CUSTOMS Bangalore(adjudication) C.R BUILDING,P.B NO.5400, QUEEN'S ROAD BANGALORE - 560001 KARNATAKA Respondent(s)
Appearance:
Mr. A.K. Madhav Rao, Consultant BMR & ASSOCIATES LEVEL 3, PRESTIGE NEBULA-1-8-12, CUBBON ROAD, BANGALORE -560 001 For the Appellant Mr. Ganesh Haavanur, A.R. For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 07/05/2014 Date of Decision: 07/05/2014 Order Per : B.S.V.MURTHY Even though the matter has been listed only for considering the stay application and requirement of waiver of predeposit, after hearing both sides, we found that the matter can be finally decided at this stage itself. Since both sides had no objection, requirement of predeposit is waived and matter is taken up for final decision.
2. The appellant is engaged and licensed to carry out life insurance business. The appellant had procured reinsurance service from over-seas companies and had availed CENVAT credit of service tax paid on such services received by them. In the impugned order, it has been held that such service tax paid on reinsurance services received cannot be considered as input service since reinsurance takes place after the insurance business is effected.
3. Learned counsel for the appellant submitted that according to Section 101A of the Insurance Act 1938, every insurer dealing with insurance business is required to reinsure a specified percentage of sum assured with another insurance company. According to the definition of insurance service, insurance as well as reinsurance are subject to service tax. He submits that in paragraph 4 of Circular No. 120(a)/2/ 2010-S.T. dated 16.4.2010, it has been stated that In fact, it is the reinsurer which provides insurance service to the insurance company. In view of the above, he submits that availment of CENVAT credit by the appellant is in order.
4. The learned A.R. would reiterate the arguments advanced by the learned Commissioner in the order-in-original.
5. We have considered the submissions made by both sides. According to Section 101A of the Insurance Act 1938, every insurer shall insure with Indian reinsurers, such percentage of sum assured on each policy as may be specified by the Authority with the previous approval of the Central Government under Sub-section (2). Since reinsurance is a statutory obligation and the reinsurance is coterminous with the insurance policy, we consider that the stand taken by the Revenue that the transfer of a portion of the risk to the reinsurer which is all the reinsurance means has to be considered as having a nexus with the output service namely provision of insurance to the customers. We take note of the fact that the percentage of insurance to be reinsured is directly connected to the premium collected from the persons who are insured with insurer and it is basically transfer of a portion of the risk and therefore it can be definitely said that the reinsurer is providing the service to the insurance company when he accepts to reinsure a portion of the insurance undertaken by the insurer. Therefore, we consider that the impugned order cannot be sustained on merits. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief if any to the appellants.
(Operative portion of the order has been pronounced in open court) S.K. MOHANTY JUDICIAL MEMBER B.S.V.MURTHY TECHNICAL MEMBER Pnr...
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