TaxTMI 
TaxTMI 
2022 (10) TMI 428
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....t provisions of the Finance Act, 1994 (in short 'FA'). 3. Show cause notices were (SCNs) issued to the petitioner upon the basis that: (i) the petitioner had received insurance services provided by Protection and Indemnity Clubs (in short 'P & I clubs'), an entity situated outside India that provided for coverage in respect of third party liabilities. (ii) the above services were taxable under the head 'General Insurance' attracting liability in terms of Section 68 of the FA read with the applicable Service Tax Rules. (iii) post 01.07.2012, with the coming into force of the negative list, the services became taxable in terms of Section 65B(44) of the FA read with Section 66B and the applicable Rules, in the hands of the service recipient, the petitioner herein. (iv) the SCNs quantified the amounts payable as per the proposals contained therein along with penalty. 4. The petitioner responded referring to, and relying upon: (i) the principles of mutuality, in terms of which it was not liable for the tax demanded, much less the penalty, as the identity between the service provider and the recipient was the same. (ii) the pend....
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....mnity, war, strike and defence risks. 10. The pooling of risks and the consolidation of their liabilities in the Britannia is a convenient administrative mechanism and works on the basis of mutuality. The relevant clauses in the Articles of Association of Britannia are as follows: "12 (a) The funds necessary to meet the amounts debited to the separate account of a Class, and the funds thought proper to meat, provide for or reserve against outstanding, anticipated and future claims, expenses and outgoings, shall be provided by contributions to be made by the Members having Ships entered in ich Class in accordance with the Rules of such Class, and it shall be lawful for the Committee, om time to time, to direct that contributions shall be paid to the Association by such Members accordingly. (b) If the amount realised by contributions to a Class shall be more than sufficient to meet claims, expenses and liabilities then the whole, or any proportion, of the surplus may be retained and applied for the purposes of that Class in such manner as the Committee may in its absolute discretion determine; or the Committee may at any time order that the whole, or any part, of....
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....bilities in respect thereof, every such insurance being undertaken by the Association, either as such or on behalf of Members of separate classes within the Association, but without contribution or liability as between such separate classes, except as to working and other expenses, and (5) the doing all such other things (including the effecting and accepting of re insurances) as are incidental or conductive to the attainment of the above objects. There has been alteration and amendment on 8.12.1982, to the old MOA, but in sum and substance, the objects are akin except that the wordings have been modified to carry on the mutual principle marine and transit insurance business. On perusal of the said objects, I am convinced that the association is a body constituted for rendering generally without any limitation, the business of insurance against marine, transit and war and strike risk and to reinsure or accept reinsurance of any risk insured or which could be insured by the Association. In essence, I find that the business of the Association is conducted by the Committee and the Managers and their powers are drawn from the Articles. Therefore, I find that the P&I club is distinct fr....
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....be assumed that the Legislature has continued with the pre-2012 scheme of not taxing members' clubs when they are in the incorporated form. The expression "body of persons" may subsume within it persons who come together for a common pur pose, but cannot possibly include a company or a registered cooperative society. Thus, Explanation 3(a) to Section 65B(44) does not apply to members' clubs: which are incorporated. 83. The expression "unincorporated associations" would include per sons who join together in some common purpose or common action - see CIT Bombay North, Kutch and Saurashtra, Ahmedabad v. Indira Balkrishna, (1960) 3 SCR 513 at pages 519- 520. The expression "as the case may be" would refer to differ ent groups of individuals either bunched together in the form of an association also, or otherwise as a group of persons who come together with some common object in mind. Whichever way it is looked at, what is important is that the ex pression "body of persons" cannot possibly include within it bodies corporate. 84. We are therefore of the view that the High Court and the Gujarat High Court are correct in their view of the law in following Young Me....