AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 1407
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....nder ULIP Services for the period 01.04.2009 to 30.06.2012. As per the IRDA Guidelines the surrender charges are recoveries made tore coup the expenses incurred towards procurement, administration of policy and incidential thereto and thus has nexus with the service provided by the insurer to policy holder. That surrender charges are similar to pre-closure/ foreclosure charges and are neither in the nature of interest nor collected for delayed payment. These charges are recovered to cover the past expenses incurred towards provision of services and hence liable to tax. The demand of service tax on surrender charges of ULIP was confirmed by the impugned order. Hence the present appeal by the Appellant. 3. Shri Gopal Mundra, Ld. C.A. appearing for the Appellant submits that the surrender and partial withdrawal charges are in the nature of penalty as it is imposed to encourage the policy holder to continue with the contract for the full terms of the policy. Even if assumed that the surrender charges are to recoup the expenses against the consequent loss due to premature termination of policy, it would be in the nature of liquidated damages and in no manner be considered towards perfo....
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....no suppression, fraud, collusion or willful mis statement. 4. Shri M. Suresh, Ld. Deputy Commissioner (AR) appearing on behalf of Revenue reiterates the findings of the impugned order. He takes us through the relevant definitions and details of charges under ULIP. He submits that the surrender charges are also liable for tax. Here lies upon the Board Circular No. 334/1/2010 - TRU dt. 26.02.2010in this respect. Further he also relies upon the judgments on taxability of services in similar nature in case of HDFC Standard Life Insurance Co. Ltd. Vs. CST, Mumbai - I 2015 (38) STR 124 (TRI)wherein the matter was remanded. He also relies upon the orders in case of CCE, Guntur Vs. Andhar Sugars Ltd. 1988 (38) ELT 564 (SC)and Hitachi Home & Life Solution Ltd Vs. C.C (Import), Nhava Sheva2012 (285) ELT 504 (TRI) wherein it was held that the Circular issued by the Board has great weightage. He also submits that in case of SMALL INDUSTRIES DEV. BANK OF INDIA Vs. CST, AHMEDABAD2015 (38) S.T.R. 666 (Tri. - Ahmd.) the issue involves of charges on fore closure of loan has been referred to the Larger Bench and hence the issue involved in present appeal may also be referred. 5. We have carefully ....
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....imum amount fixed by the Insurance Regulatory and Development Authority established under section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), as fund management charges for unit linked insurance plan or the actual amount charged for the said purpose by the insurer from the policy holder, whichever is higher;] We find from the above that the taxable service in case of Unit linked insurance plan is considered only that portion which involves management of segregated fund in relation to management of investment under ULIP, difference between premium paid by the policy holder and the sum of premium paid for or attributable to risk cover and any amount charged for management of investment under the ULIP. In nut shell whatever amount is charged for the management of investment portion in ULIP policy is a taxable service and thus liable for service tax. On the contrary the surrender charges are charged by the assessee when the person dilutes the policy completely or partially. We find from the Notification F. No. IRDA/Reg/2/52/2010 dt. 01.07.2010 issued by the Insurance Regulatory and Development Authority (Treatment of Discontinued Linked Insurance Po....
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....ified that "entry and exit load" charged by mutual fund would not attract service tax levy under the category of fund management service. Similarly in case of Container Detention charges the Board vide Circular No. 121/2/201 - ST dt. 26.04.2010 held that the detention charges is not a service but can be called penal rent and hence not chargeable to tax. The relevant portion is as under : 4. The issue has been examined. To retain the container beyond the pre-holding period is neither a service provided on behalf of the client(Business Auxiliary Service) nor is it an infrastructural support in the business of either the shipping lines or the customer (Business Support Service). Such charges can at best be called as 'penal rent' for retaining the containers beyond the pre-determined period. Therefore, the amount collected as 'detention charges' is not chargeable to service tax. Drawing the above same analogy the surrender charges under ULIP cannot be held as charges towards fund management and hence are not taxable. The service tax is chargeable only on taxable service value and the surrender charges cannot be thus taxed as it is not towards providing taxable service of fund manag....
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....lery Show Vs. CCE & ST, JAPUR - I2017 (49) STR 313 (TRI) it was held that the cancellation charges are not liable for service tax. The relevant findings of the Tribunal are as under : 6. that the same are being retained As regards the cancellation charges, we note by the appellant from the initial amounts given to them for booking a booth, when the same is subsequently cancelled by the customer and the amount is refunded to them. Admitted position, which emerges is, that no booths are ultimately rented out by the appellant to their customers. As explained, such cancellation charges are for putting the appellant into inconvenience by initially booking the booths and subsequently cancelled. Inasmuch as no service stand provided by the appellant to their customers and for which purpose no consideration was ever received by them, we are of the view that the cancellation charges recovered by the appellant cannot be held to be the consideration for providing business exhibition services. The same are thus not liable to service tax. In view of our above discussion and on perusal of the facts of the case we are of the view that the surrender charges are not part of taxable service of ma....