TaxTMI 
TaxTMI 
2019 (2) TMI 688
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....Appellant undisputedly did so, the issue that arises in these proceedings is whether such investment in securities can be considered as an exempt service covered under "Trading of Goods" (Securities) warranting reversal of CENVAT Credit under Rule 6 of CENVAT Credit Rules for the period October 2010 to March 2015. Another issue that arises for consideration is if reversal under Rule 6 is warranted, whether such a reversal ought to be on the presumptive value of 6% or 8% in terms of Rule 6(3)(i) or ought to be on proportionate basis as indicated in terms of Rule 6(3)(ii) read with Rule 6(3A) of CENVAT Credit Rules 2004. 4. Ld. Counsel appearing for the appellant assessee draws our attention to entire case records and to the provisions of the Insurance Act 1938 and submits that as an Indian Insurance Company, the appellant assessee could only have conducted the life insurance business and that under the Insurance Act, it was mandatory on its part to invest the funds in their hands, in approved securities of a value which is not less than the sum of its current and expected future liabilities towards its policy holders. It was also submitted that under the Insurance law, all the fu....
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....ading, when regulations imposed by IRDAI cannot take away or change the nature of character of activities of investing and selling of securities. It is his further submission that in the department's appeal, the demand is the show cause notice has been worked out on the basis of an amount equivalent to 5% or 6% of the value of exempted services while the adjudicating authority as ordered for reversal of the CENVAT Credit availed on input services used in trading proportionately, hence the impugned order needs to be modified to that extent and not to the extent confirmed by the adjudicating authority. 6. On careful consideration of the submissions made by both sides, we find that undisputedly, the appellant assessee is an Indian Insurance Company licensed by Insurance Regulatory Development Authority of India (IRDAI) to carry only on life insurance policies. The definition of "Life Insurance Business" in Section 2 (11) of the Insurance Act, 1938 along with its explanation is reproduced: "life insurance business" means the business of effecting contracts of insurance upon human life, including any contract whereby the payment of money is assured on death (except death by accide....
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....he investment of the policy holder are liable to be taxed under taxable head in the life insurance services, as specified in Section 65(105)(zx) of the Finance Act, 1994. This position is also acknowledged by CBEC in para No. 2.1 of Annexure B to the circular No. 334/3/2011-TRU, dated 28.02.2011, the relevant para reads as under: "2.1 Life Insurance Companies provide services relating to risk cover and managing investment for the policy holders. The former is already subjected to service tax. The latter is now being brought into the tax net. Similar services rendered by way of ULIP are already subject to service tax net since 2008." 9. In pursuance or the provisions, appellant assessee has accordingly been, undisputedly, discharging the tax liability on the premiums collected by them towards different life insurance policies issued by it, details are as under: (a) Traditional Policies, power risk insurance policies on which service tax liability is discharged at the applicable rate on the entire premium collected. (b) Participating/non-participating policies (endowment policies) on which appellant discharged service tax @ 1.5% of the gross premium charged in terms of Ru....
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....service tax leviable thereon, and includes services on which no service tax is leviable under section 66 of the Finance Act (and taxable services whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken. Explanation - For the removal of doubts, it is hereby clarified that "exempted services" includes trading)" 12. It can be seen from the above definition that in order to be termed as "Exempted Services", the following is required: (i) Taxable service which is exempted from whole of service tax leviable thereon or (ii) Service, on which no service tax is leviable under section 66(B) of Finance Act; or (iii) Taxable service whose part is exempted on the condition that no credit on input and input services used for providing such taxable services shall be taken but shall not include the service which is exported. 13. The definitive meaning attributable to the above would mean that an exempted service means no tax should have been leviable on the same and a person undertaking trading of securities on his own account does not discharge any tax qua other activity. However,....