TaxTMI 
TaxTMI 
2020 (9) TMI 355
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....h interest under Section 75 of the Finance Act, 1994, (the Act) and penalty under Section 78 of the Act read with Rule 15(4) of the CENVAT Credit Rules, 2004 (the Credit Rules). 2. The facts of the case in brief are that the appellant is engaged in insurance business offering Life Insurance Policy (Term Insurance Policy), Endowment Policy and Unit Linked Insurance Policy (ULIP). During the period in dispute, premium money collected for Term Life Insurance and Endowment Life policies were fully taxable. In the case of ULIP, the premium is collected for two components - risk coverage portion and investment portion, the premium payable on the portion of risk coverage was only taxable, i.e. the premium attributable to investment portion was no....
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....nd that that credit was availed wrongly with the intent to evade payment of service tax. The said adjudication order is under challenge in this appeal. 4. Shri Harish Bindumadhavan, learned Advocate appeared for the appellant and Shri Rama Holla, learned Superintendent (AR) appeared for the Revenue. 5. The learned Advocate appearing for the appellant submitted that:- (i) they were engaged in the provision of only one service i.e. life insurance service in the course of carrying out life insurance business and therefore, no exempt service has been provided by them. (ii) the customer has to purchase the ULIP as a whole and cannot choose to avail only the investment portion and not the insurance component and therefore, the services rend....
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....der of taxable service shall be allowed to take credit of service tax leviable under Section 66 of the Act which is paid on any input service. The term 'input service' as defined in Rule 2(l) "means any service used by a provider of taxable service for providing an output service .....". In terms of the basic provisions contained in Rule 6(1) of the Credit Rules, credit shall not be allowed on input service which is used in providing exempted service. The term 'exempted service' has been defined in Rule 2(e) which means "taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under section 66 of the Finance Act". 10. In the instant case, on perusal of ....
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....hich is wholly exempted from service tax, which is not the case herein. Further, second part of the definition of 'exempted service', will cover cases where more than one service is rendered and one of the services is not subject to tax which is also not the case herein, inasmuch as only one and single service is rendered. Moreover, in any case, merely for the reason that a portion of the total premium amount is taxable, which may be referred as assessable value for tax purpose, would not render the other portion of premium as 'exempt service' which at best can be said to have been excluded from the assessable value. In view of the above reasons, we are of the considered view that no exempt service has been rendered by the appellant so as t....
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....ed to Rule 2(e) of Cenvat Credit Rules, 2004 to state that exempted service shall include service on which no tax is payable. We note that in the present arrangement the appellant-assessee is providing Service of ULIP for the insured. For such service, the tax is paid. There is no separate identifiable service attributable to investment portion of the premium in the present case. In other words the premium amount received was invested substantially and for managing such investment, administration charges are collected and Service Tax paid. No other service, least of all exempted service, could be identified in such arrangement. Hence, we are in agreement with the method of calculation adopted by the Original Authority in arriving at the por....