TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 1039
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.... India is regulated by the Insurance Act. Section 3 deals with registration and sub-section (1) of section 3 provides that no person shall, after commencement of the Insurance Act, carry on any class of insurance business in India and no insurer carrying on any class of insurance business in India shall, after the expiry of three months from the commencement of the Insurance Act, continue to carry on any such business, unless he has obtained from the Authority a certificate of registration for the particular class of insurance business. Section 3(4)(f) provides that the authority shall cancel the registration of an insurer, either wholly or in so far as it relates to a particular class of insurance business, if the insurer makes default in complying with, or acts in contravention of any requirement of the Insurance Act or of any rule or any regulation or order made or any direction issued thereunder. Section 101A of the Insurance Act deals with reinsurance with Indian re-insurers. It provides that every insurer shall re-insure with Indian re-insurers such percentage of the sum assured on each policy as may be specified by the Insurance Regulatory and Development Authority of India ....
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....ing the premium allocated to it under the matrix and charged service tax thereon. Likewise, invoices were raised by all pool members on each other. The service tax charged in such invoices is availed as credit by each member. The Appellant has also availed CENVAT credit of service tax paid on such re-insurance service provided by the pool member companies under the Insurance Pool. 7. In respect of re-insurance services rendered by Indian Companies, service tax is charged from the Appellant and then deposited in the Government account. In respect of re-insurance services rendered by foreign companies, the Appellant is discharging service tax under the reverse charge mechanism. The Appellant has been availing CENVAT credit of service tax paid on such re-insurance services. This CENVAT credit can broadly be categorized as under:- (a) Re-insurance services rendered by pool member companies which charge service tax from the Appellant on their invoices; (b) Re-insurance services rendered by other Indian reinsurers which charge service tax from the Appellant on their invoices; and (c) Re-insurance services rendered by foreign reinsurance, on which service tax is paid by the Appell....
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....missioner noted that there was no difference between reinsurance services obtained directly from the Indian reinsurers, reinsurance services obtained directly from the Foreign reinsurers and reinsurance services obtained under Indian Third Party Insurance Pool in as much as that all the three components relate to the service of reinsurance and, therefore, what was important to examine was whether reinsurance services fall within the ambit of "input service" as defined in rule 2(l) of the CENVAT Rules. The Commissioner found that reinsurance service has a nexus with the output service. 12. It is for this reason that the Commissioner dropped the demand for the period prior to April 01, 2011 and the observations are; "21.7.14 Hence, in view of the above, for the period prior to 01.04.2011, the said "reinsurance service" within the ambit of definition of "input service" as given under Rule 2(1) of the CENVAT Credit Rules, 2004 in as much as that the same has been obtained by the Noticee for the purpose of providing/ rendering output service, viz. general insurance service and the same has a nexus with the output service of the Noticee. 21.7.15 Hence, in view of the above decision....
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....eans any service provided or to be provided to a policy holder or any person, by an insurer, including re-insurer carrying on general insurance business in relation to general insurance business. 16. An insurer issues insurance policy to insure and assumes the risks arising thereunder. The insurance of such risks assumed by the insurer by another insurer is called re-insurance, which would, therefore, be insurance of insurance. Re-insurance, thus, is an insurance of insurer's risks. An insurance policy is issued for a specific term and it is for whole term of the policy that the insurer assumes the risk on the insured subject. This business of the insurer is insured by any insurer called a re-insurer and for this purpose the insurer pays a premium to the re-insurer. 17. As noticed above, both insurance and re-insurance services are covered under the scope of the general insurance service classifiable under section 65(105)(d) of the Finance Act and chargeable to service tax. The Appellant has stated that it has paid service tax on the "output service" rendered by it. The re-insurers providing re-insurance services also pay service tax on output re-insurance service rendered by ....
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.... could be availed as such services were not deemed to be input services for the manufacturers and/or output service providers. The said exclusion clause unambiguously and categorically included the service availed in respect of general insurance services as defined under Section 65(105)(d) of the Finance Act, 1994. Thus, it is materially evident that during this period the allegations pertain to "exclusion clause" of general insurance services falling under Section 65(105)(d) of the Act ibid and related to motor vehicles, which incidentally is the subject matter of the disputed issue in the instant case. xxxxxxx xxxxxxxx xxxxxxx 21.8.4 Since the said governing provisions specifically and unambiguously excludes all services availed for the purposes of rendering general insurance services from the definition of "input service", thus, I hold that for period from 01st April, 2011 to 30th June, 2012, the said reinsurance service cannot be considered as an input service and according, the CENVAT Credit availed by the Noticee in respect of the same has been wrongly and incorrectly availed. The quantum of CENVAT Credit wrongly and incorrectly availed by the Noticee is as follows:- Yea....
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....the learned counsel for the Appellant and the learned Authorized Representative of the Department have been considered. 20. The Commissioner has granted relief to the appellant for the period prior to April 01, 2011 because of the definition of 'input service' as it stood prior to April 01, 2011. The dispute is only with the regard to the period subsequent April 01, 2011, when the definition of 'input service' was amended by adding an exclusion clause in rule 2(l) of the CENVAT Rules. 21. A perusal of the exclusion clause shows that its scope is limited to those general insurance services, which relate to a motor vehicle. Use of the word 'a' assumes significance here, also considering the exception drawn in the exclusion clause. 22. In the instant case, the reinsurance services availed by the Appellant are for insuring its business risks and not in respect of any particular motor vehicle. Reinsurance, by its nature, pertains to the insurance of business of the Appellant. Reinsurance services have never been availed by the Appellant in respect of a particular motor vehicle. In such a case, the above exclusion clause has no applicability to the present case and denial of CENVAT ....
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.... companies under the Insurance Pool. In the first instance, the finding in the impugned order that the Appellant is not eligible for CENVAT credit of service tax paid under the Insurance Pool since the Appellant has not actually paid any amount to the member companies is beyond the scope of the show cause notice. Even otherwise, the factual position has not been correctly appreciated by the Commissioner. As noticed above, under the pool arrangement, the Appellant deposits the whole premium collected by it in the pool account and based on the prescribed formulae, the GIC determines the amount of re-insurance premium due to each member as against the other members. Thus, in effect, each company pays the re-insurance premium after deducting the amount due from the other member companies. The service tax liability stands discharged on the whole re-insurance premium paid to the other members. It cannot be, therefore, be urged by the Department that the invoices that are issued by the pool member companies are not for any provision of service or without any payment. The re-insurance services are provided by the pool member companies and it is for this reason that the Insurance Pool was f....