TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 400
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....onal Golden Year Plan) and availed cenvat credit. The Appellant after audit were issued show cause notice dt. 03.08.2012 alleging that they are providing taxable service (risk premium), Non taxable service (investment management service provided under ULIP for the period 2010 11) and fully exempted service (Traditional Golden Year Plan) and therefore are required to pay the amount/ reverse cenvat credit as prescribed under rule 6 (3) of Cenvat Credit Rules, 2004 on the exempted service. It was contended that the Appellant by not declaring, the monthly proportional reversal in the said ST 3 Returns and also not opting for such proportional reversal under Rule 6 (3A) are liable to pay the amount/ reverse the cenvat credit alongwith interest. It was proposed a demand of an amount of cenvat credit of Rs. 39,14,082/- availed on the service tax paid under reverse charge on the commission paid to agents/ brokers under explanation II of Rule 6 (3) of Cenvat Credit Rule as the service is exclusively used for provision of exempted service namely Traditional Golden Year Plan ; to pay cenvat credit of Rs. 3,55,18,417/- equivalent to 6% of value of exempted service under Rule 6 (3) (i) of CCR i....
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.... to April 2011 only includes the services in relation to risk cover in life insurance. The service tax was required to be paid on the amount of risk portion. The Traditional Golden Plan does not contain any risk and hence no amount was collected towards risk cover and thus no service is rendered in relation to risk cover and service tax was not paid during the period May 2010 to April 2011. The product is covered under Life insurance service and not under exempted service. The products were taxable under Life Insurance Service during 2010 11 including the product Traditional Golden Year Plan which was not offering risk to the policy holder. The product being life insurance product approved by IRD was taxable under Life Insurance Services but the taxable value was zero as there was no risk cover. He cites the definition of exempted service as per Rule 2 (e) of Cenvat Credit Rules and submits that the revenue considering the Traditional Golden year Plan as exempted service has alleged that the services of commission agent to sell these policies cannot be termed as eligible of credit and the 6% of the value has been demanded. He submits that the 'Traditional Golden Year Plan canno....
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....on was not available before 2016 for computation of value of exempted service during the disputed period. He also submits that in any event value of exempt service under rule 6 (3) (1) cannot include value of investment portion of premium. That in the demand confirmed by the department the entire amount of premium which includes the saving portion and investment portion has been considered in exempted value for computing demand and 6% has been demanded thereupon whereas the investment portion will not constitute the value of exempt service. Therefore the demand shall be only of Rs. 56,73,672/-. The Appellant submits that without prejudice to their submission if at all they are not eligible for the credit in that case they are entitled for proportionate reversal of cenvat credit of common services on the alleged exempted service. The department has demanded 6% of value of exempted service. However they have option of reversal under Rule 6 (3A) of cenvat credit rules and the demand is thus limited to the extent of Rs. 30,65,762/-. That the said computation has been done by taking the entire cenvat credit of Insurance Auxiliary service as the same fell in ambit of Rule 6 (5) of CCR in....
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..... 03/COMMR/(AK)/08 dt. 18.01.2008 held that in order to levy service tax u/s 66, the service should be 'taxable service'. Accordingly in case of pension products, the same are not taxable at all and cannot be construed as 'exempted service'. He also relied upon the letter dt. 29.08.2011 by the department to Joint Secretary (TRU), CBEC, North Block requesting to issue circular on the reversal of cenvat credit availed by the Life Insurance Companies. That in the said letter the department itself admitted that Life Insurance Companies have been audited from time to time and therefore extended period should not be invoked against them for issue of show cause notice. That in view of above judgments the ingredients of suppression of facts with intent to evade duty and malafide intentions proviso to Section 73 (1) of the Finance Act, 94 are not attracted. He also submitted that since in the present case they are not liable to pay service tax hence there is no question of imposing penalty on them and interest also cannot be imposed. 4. Shri M.K. Sarangi, Ld. Additional Commissioner (AR) appearing for the Revenue reiterates the finding of the impugned order. He has also fil....
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....xable policies as well as policies which had no risk portion and hence not liable to tax. However we are of the view that in terms of explanation to Rule 2 (e) of CCR, 2004 the services on which no service tax is payable is to be considered as exempted service and the credit of input or input services is not available to the 'service provider'. The Traditional golden plan which does not have any risk cover and thus being not liable to tax falls under the category of exempted service at the relevant time. The Appellant at the relevant time on the basis of interpretation of the provisions of the Finance Act and Cenvat Credit Rules, 2004 considered their service as not exempted and availed cenvat of input service which were commonly used. The Appellant though litigating the show cause notice and demand on merits had also prayed for reversal of credit instead of demand of 6% value of the exempted goods contending that the substantial benefit of reversing the credit should not be denied to them. Before us also it is their submission that they have been given option to reverse the proportionate credit and they cannot be forced to reverse 6% of the value of exempted goods in terms....
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....mpted service as held by the impugned order. It is also held that the appellant has to follow the consequences of such finding. We note that upon the direction of the impugned order, the respondent did exercise the second option and reversed the credit along with interest. In such factual background, we find that there is no reason to insist that the respondent should necessarily follow the first option of paying 6% of the value of exempted service. We find no merit in the appeal by Revenue. Accordingly, we dismiss the same." 5.1. We are in agreement with the aforesaid order of the Tribunal and the other judgments and hold that the Appellant is entitled for reversal of credit attributable to the exempted service and the demand of 6% is not sustainable against them. The Appellant has also argued that there reversal of cenvat credit ought to be computed by taking the entire cenvat credit of the services of Insurance Auxiliary Service as the same fall in ambit of Rule 6 (5) of Cenvat Credit Rules, 2004 in line with Tribunal's decision in case of TATA AIG Life Insurance Company Ltd. reported in 2014 - TIOL - 487. We find that in terms of Rule 6 (5) of CCR, 2004 the credit of tax p....