State Consumer Disputes Redressal Commission
Dandu Krishna Murthy Raju,Erragadda, ... vs The Branch Manager Of Max Newyork ,Life ... on 30 January, 2013
BEFORE THE A BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION : HYDERABAD. F.A.No. 441/2012 against C.C.No.933/2011, Dist. Forum-I, Hyderabad. Between: Dandu Krishna Murthy Raju, S/o.D.Venkataraju, R/o.H.No.8-3-167/30 Flat No.201, Erragadda, Hyderabad- 18. Appellant/ Complainant And The Branch Manager of Max Newyork Life Insurance Company Ltd., 701, Astral Heights, Road No.1, Banjara Hills, Hyderabad. Respondent/ Opp.party Counsel for the Appellant : Party in person Counsel for the Respondent : M/s.A.Naveen Kumar QUORUM: SMT.M.SHREESHA, HONBLE INCHARGE PRESIDENT, And SRI S.BHUJANGA RAO, HONBLE MEMBER.
WEDNESDAY, THE THIRTIETH DAY OF JANUARY, TWO THOUSAND THIRTEEN.
Oral Order : (Per Sri S.Bhujanga Rao, Honble Member).
*** This appeal is directed against the order dt.22.6.2012 of the District Forum-I, Hyderabad made in C.C.No.933/2011. The appellant is the complainant and the respondent is the opposite party in C.C.No.933/2011 filed by the appellant/complainant seeking direction to the opposite party as follows:
1.
to refund the service tax collected on the whole life, three policies and order not to collect future service tax on the premias of these policies.
2. to pay Rs.1,50,234/- with 12% interest due to fore closure of the unit linked policy as risk component.
3. to pay Rs.50,000/- towards compensation for deficiency in service, unfair trade practice and mental agony,
4. to pay Rs.5000/- towards costs of the complaint.
For the sake of convenience, the parties are described as arrayed in the complaint.
The brief case of the complainant as set out in the complaint is as follows:
The complainant obtained three whole life policies from the opposite party life insurance company as below:
Sl.No. Policy No. Date Annual Premium
1. 250559390 30.12.2004 Rs.11,492.25
2. 550559382 15.3.2005 Rs.25,000-00
3. 250559358 30.11.2005 Rs.31,920-00 The policies were in force before June, 2009. The opp.party company paid the service tax upto June, 2009 and thereafter they forcibly collected the service tax at 10.5% on the above policies, contrary to the terms of the insurance contract.
Hence, it is unfair trade practice and company is liable to refund such service tax collected, to the complainant and should not collect the service tax in future premias.
The further case of the complainant is that he obtained the fourth policy Life Maker Unit linked Investment Plan Policy with risk cover of Rs.1,50,214/- with policy no.412480113 on 27.1.2005. On 8.3.2011, the complainant applied for partial withdrawal upto 50% of the existing fund value, but contrary to this request, the opposite party company foreclosed this unit linked policy. Hence the insurance company is liable to compensate the risk element of Rs.1,50,214/- with 12% interest from the date of foreclosure. Hence the complaint.
Resisting the complaint, the opposite party insurance company filed written version admitting the issuance of the policy in favour of the opposite party, while denying the forcible collection of service tax. Opposite party contended that by charging service tax, they neither violated the terms of the contract, nor the law. As per Section 83 of the Finance Act,1994 read with Section 12B of the Central Excise Act, 1944, the incidence of service tax falls on the recipient of the services i.e. customer. Clause 19 of the terms and conditions of the policies, the policy shall be governed by and subject to the laws of Republic of India and service tax is charged as per the provisions of the Finance Act, which is law passed by the Government of India. Thus, there is no violation of insurance contract.
With regard to the foreclosure of the life maker unit linked investment plan, the opposite party contended that they received an application from the complainant on 8.3.2010 for partial withdrawal in policy no.412480113 and a cheque for an amount of Rs.49,838.92 was sent on 13.3.2010 to the complainant. On 9.3.2011 the opposite party again received a customer request for partial withdrawal in policy no.412480113. That on 11.3.2011, the said policy was erroneously surrendered and an amount of Rs.65,256.56 ps. was credited in the account of the complainant through NEFT. On 31.3.2011 on realization of mistake, an apology was sent to the customer i.e. the complainant herein informing that the policy was surrendered erroneously and requested to return the amount, so that, they can revive the policy. But the complainant did not return the amount. Thus there is no deficiency in service on the part of the opposite party. Therefore, the complaint is liable to be dismissed with costs.
During the course of enquiry , in order to prove his case, the complainant filed his evidence affidavit and got marked Exs.A1 to A8. On behalf of the opposite party, only evidence affidavit was filed.
Upon hearing the counsel for both the parties and on consideration of the material on record, the District Forum came to the conclusion that the opposite party is having the right to collect the alleged tax from the policy holders and it is an implied admission by the opposite party regarding erroneous foreclosure of the policy, which amounts to deficiency in service on its part. Consequently, the District Forum allowed the complaint, in part, directing the opposite party to pay a sum of Rs.10,000/- towards compensation, for having surrendered/foreclosed the policy no.412480113 of the complainant along with costs of Rs.2000/- only to the complainant.
Aggrieved by the said order, the complainant preferred the above appeal contending that the District Forum-I, Hyderabad passed the order against the complainant in favour of the opposite party allowing the complaint partially but not considering the coverage option (B) as increasing sum assured + account value, is unjust in law and that the District Forum failed to consider the three policies which are free from service tax upto May 2009. Hence the opposite party cannot modify the premium by imposing a part of service tax from 2009 and 2010 @ 1% and 2011 @ 1.5% and 3% surcharge on it, whereas the LIC of India and Sriram Life are not imposing such Service Tax. Hence the order of the District Forum-I, Hyderabad is liable to be set aside.
We heard the appellant/complainant party in person and the counsel for the respondent and perused the material placed on record.
Now the point for consideration is whether the impugned order of the District Forum is vitiated for misappreciation of fact or law.
It is an admitted fact that the complainant applied for 50% partial withdrawal in Life Maker ULIP policy dt.27.1.2005 bearing no.412480113 and accordingly the opposite party insurance company paid Rs.49,838.92 to the complainant vide cheque bearing no.12997 and Ex.B4 confirmation letter dt.22.3.2010 was also sent to the complainant .The contention of the opposite party is that on 9.3.2011, again they received a customer request for partial withdrawal in the same policy no. 412480113. That on 11.3.2011 the said policy was erroneously surrendered and an amount of Rs.65,256.56 was credited in the account of the complainant through NEFT. On 31.3.2011, on realization of the mistake, an apology was sent to the complainant informing that the policy was surrendered erroneously and requested to return the amount, so that, they can revive the policy. The copy of the letter is marked as Ex.B5 . Infact, the complainant has not disputed the above contention of the opposite party, but submitted that as per law, once the policy was terminated, it cannot be revived unilaterally by insurer by expressing apologies. The complainant has not placed any law, under which the insurer cannot revive a terminated policy. The complainant did not return the amount of Rs.65,256.56 ps. credited to his account, to enable them to revive the policy.
Having not refunded the said amount, inspite of the opposite party expressing their willingness to revive the policy, there is no basis for the complainant to claim Rs.1,50,214/- with 12% interest there on and it cannot be said that there is any deficiency in service in this regard. The Dist Forum rightly observed that it is imperative for the opposite party to revive the policy if the complainant opts for it.
Coming to the second ground urged by the complainant in the appeal, under Section 66 of Finance Act, the service tax at the rates applicable will have to be collected by the person rendering service from the person or customer, in whose favour, such service rendered. Section 68 provides that an insurer who is providing taxable services for any person shall collect the service tax at the rates specified under Section 66 of the Finance Act. Further, the service provider who is responsible for collecting the service tax, has to get himself registered under Section 69 and has to furnish the prescribed return, periodically, under section 70 of Finance Act. It is pertinent to mention that if service provider, who is responsible for collecting the tax but fails to collect such tax is also liable to pay penalty equal to the tax, apart from interest there on, as per Section 76 of the Finance Act.
In view of the above provisions of law, the liability to pay service tax is on the complainant and the opposite party being a service provider has to collect such tax from the complainant and pay them over to the Central Government/taxing authorities by filing appropriate returns etc. The contention of the complainant is that as shown in Exs.A1 to A3, from 2009 onwards only, the service tax of premia at 1.03 % to be collected with the renewal premium from 2009 as the levy comes into force but not on existing policies, before 2009. Though Ex.A1 is dt.26.12.2009, Ex.A2 is dt.29.1.2010, the notification no.35/2011 relied upon by the complainant in his written arguments deals with amendment of service tax rules, which has come into effect only from first day of May,2011 whereunder an option is given to insurance company to pay in either ways provided thereunder, however it is made clear there under that such an option is not available to the insurance company, when the entire premium paid by any policy holder is only towards the risk cover in life insurance. As could be seen from the policies, entire premium was paid by the complainant only towards the risk cover in life insurance and therefore the said notification also has no application.
Further, the contention of the complainant is that there is no clause in the insurance contract entered into by him for collection of the service tax. It is an admitted fact that as per Clause 19 of the terms and conditions of policies, the policy shall be governed by and subject to laws of Republic of India and the service tax is charged as per the provisions of the Finance Act which is law passed by the Government of India. Thus, there is no violation of Insurance contract.
The complainant filed Exs.A7 and A8 to show that LIC of India and Sriram Life Insurance are not collecting the service tax as these policies are existing before 2009 and are following the law as per the Internet Citation Notification no.8/2002-service tax dt.1.8.2002 person liable to pay is insurer. In support of his contention the complainant has not filed any documentary evidence. It is the discretion of each Insurance Company to collect the service tax or not, from the customers, but they have to pay the service tax either by themselves or by collecting the tax from the customers as per the provisions of Finance Act. Therefore simply because the other insurance companies are not collecting the service tax, we cannot direct the opposite party herein not to collect the tax from the customers against the provisions of Finance Act, which are described as above. Therefore, we find no substance in the submission of the complainant.
Having regard to the above facts and circumstances, we do not find any deficiency in service on the part of the opposite party. We also find no irregularity or illegality in the impugned order of the District Forum to interfere with it.
In the result, the appeal is dismissed, but without costs in the circumstances of the case.
INCHARGE PRESIDENT MEMBER Pm* Dt. 30.1.2013