Charging of S.Tax on earning through LIC

[Asked by Guest]

Sir,

I have a policy of 25 Lac for maintenance of my factory assets(machinery) and also paying premium.Before the policy expired I incurred loss to assets and received compensation as per insurance terms from insurer to the tune of 8 lacs. The service tax deptt. is claiming service tax on this income as business income. Please guide.Regards,Pradip.

AI Summary

Service tax on insurance compensation challenged as not leviable where no service is provided; consider exemptions.
The issue is whether Service tax applies to insurance compensation received for loss to factory machinery; the department treats it as business income and taxable, while others argue it is not leviable because no service was provided and compensatory receipts fall outside service tax, advising review of the negative list, exemption notifications and possible SSI classification.