TaxTMI 
TaxTMI 
2025 (10) TMI 330
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....xable value of Insurance Auxiliary Services provided by an Insurance Agent and hence exigible to Service Tax under Reverse Charge Mechanism. Two Show Cause Notices dated 24.05.2013 and 22.04.2015 were issued to the appellants, demanding Service Tax, alleging that (i). amounts allegedly recovered by Appellant from their Insurance Agents as Service Tax on the commission paid to the agents being inclusive of service tax is to be deposited with the Government exchequer in terms of Section 73A of Finance Act, 1962. (ii). amounts reimbursed by appellant to its agents towards conveyance for attending training sessions qualify as indirect payment of commission to these insurance agents for soliciting insurance business) (iii). expenses incurred on foreign trainings of insurance agents form part of taxable value of Insurance Auxiliary Services provided by an insurance agent and hence exigible to Service Tax under Reverse Charge Mechanism. 2.1. Commissioner of Service Tax, Delhi IV, vide Order-in-Original, dated 30.11.2016, dropped the demand of Rs. 53,81,52,597 on the issue at No (i) above but confirmed the demand of Rs 4,50,23,266 on the issues at (ii) and (iii) above, along wi....
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....is no longer res integra having been decided by the New Delhi Bench of the CESTAT in the case of Max Life Insurance Company Limited, having identical facts, vide Final Order 51498 dated 15.11.2019 for the period 2007-2013, and vide Final Order 50767/2023 dated 30.05.2023 for the period 2013-2014; Revenue did not file any appeal against this order. Learned Counsel further submits that Mumbai Bench of the CESTAT also, in the case of Bajaj Allianz & Ors, set aside the demands on identical issues, in respect of several other life insurances, vide Final Order A/86013-86023/2019 dated 31.05.2019; though, Revenue filed appeals in some of these cases, no stay has been granted by the Hon'ble Supreme Court. 6. Learned Counsel submits that extended period of limitation is not invokable in the present case as the Appeal involves interpretational issues; department was always aware of the above practices adopted by the Appellant and the insurance industry at large through periodic audits; as there is no willful suppression, fraud, or collusion, extended period cannot be invoked; as the demand for Service Tax is not sustainable, the interest is not payable under Section 75 of the Act; moreove....
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....atory training cannot be considered as a consideration for the services provided by the agents. 10. We find that as per the ratio of Bhayana Builders (2018) 3 SCC 782; Intercontinental Consultants & Technocrats Pvt. Ltd. [2013 (29) S.T.R. 9 (Del.), only the consideration for such service is includible in the assessable Value. We find that these reimbursements are not the remuneration to the agents for the business procured or generated by them for the appellants. They are at best expenses incurred in the course of conduct of business and therefore, need to be excluded for the purposes of arriving at the assessable value of the service exigible to Service Tax. 11. We find that the Principal Bench of the Tribunal in the case of Max Life Insurance (supra) has decided both the issues in favour of the appellants. The Bench has observed as follows: 5. However, briefly the arguments made are being dwelt upon herein below: A. 5.1 Expenses incurred towards overseas & inland training: Para 2(i) & 2(ii) In respect of the demand of amount of Rs. 77,67,147/- for an expenditure incurred towards foreign training of the insurance agents, the learned counsel submitted that t....
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....ice" and no such taxable service is rendered while undergoing and providing training to the agents. For greater clarity, Rule 5(1) ibid is reiterated hereunder. Rule 5. Inclusion in or exclusion from value of certain expenditure or costs - (1) Where any expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable service provided or to be provided and shall be included in the value for the purpose of charging service tax on the said service. 5.3(ii) Further, though Rule 6 (1) (ix) of the said Valuation Rules lays down that commission, fee or other sum paid to the insurance agent in relation to insurance of auxiliary service rendered by the insurer appointing, shall be included in the value of the taxable service, however, the gross value of the taxable service in terms of section 67 ibid vis-à-vis the payment of commission, fee or any other sum as envisaged in Rule 6 (1) (ix) has to be in relation to the procurement and solicitation of the insurance business. It is very categorical from the words in the statute that such sum paid....