Service tax on insurance premium remained confined to the rate in force when the premium was paid, despite later rate revision.

Service tax was not payable at the enhanced rate on the portion of insurance premium attributable to a future period where the entire premium had already been paid and the original service tax liability discharged before the rate change. The Tribunal held that the subsequent revision of the tax rate did not create liability on amounts already paid for the policy term, and the SC agreed, finding no reason to take a different view. The assessee was therefore not liable for the enhanced rate on the future-period premium.

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Issues: Whether service tax was payable on the premium attributable to the future period of an insurance policy when the tax rate was revised during the subsistence of the policy, after the premium had already been paid and service tax liability discharged.

Analysis: The Tribunal had found that the entire premium was paid before the change in the tax rate, and on that basis held that the assessee was not liable to pay tax at the enhanced rate. The Court agreed with that view and found no reason to take a different approach.

Conclusion: The assessee was not liable to pay service tax at the enhanced rate on the premium for the future period, and the appeal was therefore dismissed.

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