AI Drafter 
TaxTMI 
TaxTMI 
2021 (7) TMI 735
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....4 at the relevant time. In several of the decisions of the Tribunal arising from demands initiated against providers of insurance services, the 'on-off' nature of the levy has been taken note of and we need have no reticence in similar recapitulation here. 2. Tax liability on 'life insurance business', defined in section 2 (11) of Insurance Act, 1938 as incorporated in section 65(51) of Finance Act, 1994, was legislated by section 149 of Finance Act, 2002. With the amendment of section 65(105) of Finance Act, 1994 by insertion of '(zx) to a policy holder, by an insurer carrying on life insurance business in relation to life insurance business;' such service was made taxable along with services provided to 'policy holders' by certain other stakeholders. Though the amending section was to be brought into force from 16th August 2002 by notification no. 8/2002-ST dated 1st August 2002, the taxable service rendered by designated providers to 'policyholders' was excluded therefrom by notification no. 9/2002-ST dated 1st August 2002. 3. That exception ceased to be with issue of notification no. 23/2004-ST dated 10th September 2004 rescinding the exemption notificat....
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....ances germane to the dispute, contended that 'surrender' is a unilateral act on the part of 'policy holder' and that the contingency, as well as the option of retaining 'surrender charge' while dispersing 'surrender value', has been recognized by the constituted authority for regulation of the industry. He submits that such levy is no different from 'foreclosure charges' that, at one time the subject of demand under Finance Act, 1994, has been held by a Larger Bench of the Tribunal in Commissioner of Service Tax, Chennai v. REPCO Home Finance Ltd [2020 (7) TMI 472-CESTAT CHENNAI] as not leviable to tax under Finance Act, 1994. Further, referring to the decision of the Hon'ble High Court of Bombay in Bai Mamubai Trust v. Suchitra [2019 (9) TMI 929-BOMBAY HIGH COURT], he contends that reciprocity is essential to any provision of commercial service. Citing the decision of the Tribunal in Shriram Life Insurance Company v. Commissioner of Customs, Central Excise & Service Tax, Hyderabad-IV and another [2019 (2) TMI 868- CESTAT HYDERABAD] and MAX Life Insurance Co India Limited v. Commissioner of Central Excise & Service Tax [2019 (8) TMI 967- CESTAT DELHI], he submits that finality has ....
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...., by contrary argument, that reference to a larger bench is warranted and, in the event that we are not so persuaded, to determine the extent to which the recall of the decision in re Reliance Life Insurance Company Ltd impacts the precedent afforded by other decisions in similar disputes. Accordingly, we proceed to do so. 9. It is common ground that upon an insured ceasing to comply with the obligation to pay the premium at stipulated intervals, the policy is deemed to be surrendered and the holder entitled to 'surrender value' representing the portion of the receipts that had been invested in the appropriate funds. There is also no dispute that the amount disbursed is lesser than the value of the funds on the date of surrender. The proposition of Learned Authorized Representative is that the amount so withheld is consideration for services rendered in connection with the fund during the period of investment. This, in our view, is far-fetched for the impugned service has already been subjected to levy under section 65 (105) (zzzzf) of Finance Act, 1994 till June 2010 and under section 65 (105) (zx) of Finance Act, 1994 thereafter; if that were not so, the demand would not have ....
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....the activity has to first qualify as a service. In our view, the regulations framed by IRDA with the aim of protecting of the insured by providing for a yardstick for computation for the surrender and the consequent discontinuance charges cannot be read and applied out the services rendered a transaction in an actionable claim, as a service, liable to be taxed under the provisions of Finance Act, 1994. ' 11. In re MAX Life Insurance Co Limited, an identical dispute before the Tribunal also considered the nature of 'surrender charge' to be '32. Having considered the rival contentions, we are satisfied that surrender charges are permitted to be levied by IRDA, by way of penal charges towards recovery of initial expenses incurred by the insurer in marketing and distribution of the policy. As IRDA has fixed limits as to recovery, which can be made from time to time from the initial cost, accordingly, IRDA have permitted to recover surrender charges in case of pre-mature policy, as per the table given hereinabove, so as to enable the insurer to recoup the cost incurred by them. Further, we find that legislators have clarified by substituting clause (ii) Explanation to Sectio....
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.... The applicability of the principle that pendency of a decision before superior jurisdiction jeopardizes its value as precedent, as articulated in re West Coast Paper Mills Ltd, even if the appeal was preferred under the indirect tax statutes having had to be considered by the Tribunal in HDFC Bank Ltd v. Commissioner of Central Excise, Thane-II [final order no. A/85818/2020 dated 11th September 2020 disposing off appeal no. ST/89458/2014 against order-in-original no. 33/AC/COMMR/Th-II/ST/2014 dated 12th August 2014 of Commissioner of Central Excise, Thane-II], with the conclusion that '7................Before considering the merits of the rival submissions, it would be worthwhile to pause, and deliberate upon, the contention of Learned Authorized Representative that admission of an appeal deprives the decision impugned therein of status as binding precedent. Doubtlessly, the Hon'ble Supreme Court did, in re West Coast Paper Mills Ltd, take note that '14. Article 136 of the Constitution of India confers a special power upon this Court in terms of an appeal shall lie against any order passed by a Court or Tribunal. Once a Special Leave is granted and the appeal is ....