TaxTMI 
TaxTMI 
2026 (2) TMI 1018
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.... of India Ltd. (AICIL). 3. In this context on the basis of intelligence and subsequent investigation, it was alleged that the Appellants had not discharged appropriate service tax on re-insurance services, having claimed full exemption under Sl. No. 26 of Notification No. 25/2012-ST dated 20.06.2012. Upon scrutiny, the Department was of the view that the said exemption was inapplicable since the services were rendered to AICIL-an insurance company and not directly to farmers under WBCIS or MNAIS. The Department contended, in terms of Section 66F of the Finance Act, 1994, the reinsurance services could not be treated as the main service for purpose of claiming exemption under Notification No.25/2012-ST. 4. Accordingly, Show Cause Notice No. 01/2018 in F. No. INV/DGCEI/CHZU/ST/204/2016 dated 08.01.2018 was issued to the Appellants proposing to demand service tax of Rs.46,80,45,199/- under Section 73(1) of the Finance Act, 1994, along with applicable interest under Section 75. The notice had invoked the extended period under the proviso to Section 73(1), taking into account that the Appellants operated under the self-assessment regime prescribed under Section 70 of the Finance A....
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....o the above, he further submits that, even otherwise, the confirmation of demand is not sustainable. He pointed out that there exists a contradiction in the findings of the Adjudicating Authority. On one hand, it is stated that the Assistant Commissioner, who finalized the provisional assessments for the period 2014-15 to 2016-17, did not examine the issue of service tax on re-insurance services relating to crop insurance schemes; while on the other hand, it is observed that the DGSTI had already taken up the said issue. This inconsistency, according to the Ld. Counsel, constitutes a legal error, as the Adjudicating Authority, at para 9.4 of the impugned order, has erroneously treated provisional assessments as applicable only to certain issues, which is not permissible in law, and has consequently considered some issues as non-provisional without proper authority. c. He submits that the Appellants had never raised the issue of the doctrine of double jeopardy but had only contended as to non-application of the provisions of Section 84 of the Finance Act, 1994. The Adjudicating Authority, at para 9.4 of the impugned order, has itself admitted that the Assistant Commissioner....
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....and Development Authority (IRDA) regulations an Indian insurance company is required to take as much risk on its own account as is possible having regard to its financial strength and volume of business. To the extent an insurance company is unable to retain the risk, that portion is re-insured with a reinsurance company (situated in India or overseas). iii. Re-insurer has the same economic objective as insurance generally, i.e., the transfer and consequent elimination or reduction of risk by creation of a wider spread of exposure. Insurance of insured risk is called Reinsurance. iv. Re-insurance acceptances/cessions can be broadly classified under following two heads: (a) Treaty; (b) Facultative. v. As per the IRDA (General Insurance - Reinsurance) Regulations, 2000 framed under the IRDA Act, 1999 (41 of 1999), Treaty is defined as "a reinsurance arrangement between the insurer and the reinsurer, usually for one year or longer, which stipulates the technical particulars and financial terms applicable to the reinsurance of some class or classes of business". Re-insurance arrangements are called as Treaties. Treaties can be proportional a....
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....rther relied on the provision of Section 66F(1) of the Finance Act to state that unless otherwise specified, reference to a service shall not include reference to service which is used for providing main service. It is submitted that the definition of the Finance Act, 1994 and the expression 'unless otherwise specified' in the section 66F(1) referred in the SCN had been overlooked. The definitions clearly treat the General Insurance business carried on by 'insurer' to include general insurance business carried on by 'reinsurer' and reliance placed on Section 66F(1) of the Act to deny the exemption is not correct. The insurance service provided by insurer and reinsurer cannot be segregated and isolated as services provided by them are main service. xi. The notice presumed that the service carried on the Appellants as a 'reinsurer' ceases to be 'general insurance business' from 01.07.2012 and hence the appellants are not entitled to the exemption. Notification No. 25/2012-ST dated 20.06.012 Sl.No.26(h) exempts 'services of general insurance business' provided under the schemes in question, namely, weather-based crop insurance s....
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.... Counsel, Mr. C. Dhanasekaran, appeared for the Department and reiterates the finding of the impugned order while making the following submissions:- a. Impugned service viz. re-insurance service is an activity performed by the Appellants to AICIL for consideration and clearly falls within the ambit of taxable service. b. "General insurance service" provided to WBCIS and MNAIS is eligible for exemption under Sl.No.26(h) of Notification No.12/2012-ST dated 17.03.2012. But the service in dispute is "re-insurance service" and not "general insurance service" and does not get covered under the exemption notification and had been rightly denied the exemption in the notice and the impugned order. c. "Insurance" is not defined under the Finance Act, 1994. Hence, the definition from the Black's Law Dictionary, 6th Edition to be considered as rightly done at para 12 of the impugned order. d. The Appellants are insurer and has undertaken to compensate AICIL (insured) in the event of any loss. The Appellants act as insurer for AICIL and not for ultimate farmer. Social objective of introduction of WBCIS and MNAIS schemes has to be considered. The object of....
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....11 to 30.06.2017 (both days inclusive). By virtue of this statutory provisions, which received the assent of the Hon'ble President on 29.03.2025, the Appellants are entitled to the said exemption, as the period under dispute, i.e., 2014-15 to 2016-17, squarely falls within the exempted period. 11. Due to enactment of Finance Act, 2025 introducing Section 135, the demand raised becomes unsustainable. The same reads as below: - "Section 135. Special provision for retrospective exemption from service tax in certain cases relating to reinsurance services provided by insurance companies under Weather Based Crop Insurance Scheme and Modified National Agricultural Insurance Scheme. (1) Notwithstanding anything contained in section 66 of Chapter V of the Finance Act, 1994 (32 of 1994), as it stood prior to the 1st day of July, 2012, or in section 66B of the said Chapter of the said Act, as it stood prior to the omission of the said Chapter vide section 173 of the Central Goods and Services Tax Act, 2017 (12 of 2017), no service tax shall be levied or collected in respect of taxable services provided or agreed to be provided by insurance companies by way of reinsura....