Court overturns service tax demand on Army Group Insurance Fund for life insurance services to armed forces, citing Finance Act.

The court set aside the service tax demand and penalties imposed on the Army Group Insurance Fund for life insurance services provided to armed forces members. The court noted the retrospective application of Section 105 of the Finance Act, 1994, exempting such services from service tax between 2004 and 2017. As a result, the impugned order was overturned, and the petition was disposed of accordingly.

---

---

Issues Involved:
Challenge to service tax demand for life insurance services provided to armed forces members under the Group Insurance Schemes of the Central Government.

Analysis:
1. Service Tax Demand and Penalty: The Army Group Insurance Fund filed a petition seeking to quash an order confirming a service tax demand of a significant amount for the period between October 2010 and March 2015 under 'Life Insurance Service.' The order also imposed penalties under Sections 77 and 78 of the Finance Act, 1994.

2. Interim Relief: Initially, the court directed that no coercive steps should be taken to enforce the demands. Subsequently, the matter was adjourned without any counter affidavit being filed by the Respondents.

3. Legislative Amendment: The court noted the insertion of Section 105 in the Finance Act, 1994 by the Finance Act, 2017. This new provision exempted the Army, Naval, and Air Force Group Insurance Funds from service tax on life insurance services provided to their members during a specified period, starting from September 10, 2004, to February 1, 2017.

4. Retrospective Application: The court recognized that Section 105 of the Finance Act, 1994, as amended, had retrospective effect, covering the period from 2004 to 2017. It was observed that the impugned order could not be upheld in light of this statutory provision, a fact not contested by the Respondent's Counsel.

5. Judgment: Consequently, the court set aside the impugned order based on the retrospective application of Section 105 of the Finance Act, 1994, as introduced by the Finance Act, 2017. The petition and application were disposed of accordingly, with orders to be given dasti.

---