Case Law Details
Bharat Re-insurance Brokers Pvt. Ltd Vs Commissioner of Central Excise, Customs and Service Tax (CESTAT Hyderabad)
The issue under consideration is whether the contention if the appellant is correct that they are not liable to pay service tax on brokerage received from overseas reinsurance on the ground that the service falls under the category of export of service?
In the present case, the appellant acts as reinsurance brokers and arranges for reinsurance of Indian insurance companies with overseas reinsurers. They retained the amounts as a brokerage in Indian Rupees by deducting instead of remitting the entire amount abroad and receiving back foreign currency should be treated as receipts for export in foreign currency. Officer consider it as if the service is being rendered to an Indian company for which money is being paid in Indian Rupees, the question of export of service does not arise and hence Service tax should be levied.
CESTAT states that the transactions in the present appeal are similar to the transactions in the case of Suprasesh General Insurance Services & Brokers Pvt. Ltd. (supra) inasmuch as the appellant was hired by the Indian Insurance company for identifying proper reinsurers and negotiating deals with them and have received from the Indian insurance company the entire amount due to the overseas reinsurers, out of which they have deducted their brokerage and remitted the rest to the overseas insurance company. The Hon’ble High Court of Madras has held that such cases amount to export of service and that the amounts which have been retained as brokerage in Indian Rupees by deducting instead of remitting the entire amount abroad and receiving back foreign currency should be treated as receipts for export in foreign currency. Hon’ble High Court of Madras has decided that the demand of service tax on such amounts is not sustainable. This judgment of Hon’ble High Court is now binding on them as no contrary decision has been passed by any superior Court, although the appeal has been admitted by the Hon’ble Supreme Court.
Hence, the appeal filed by assessee allowed.
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