Case Law Details
Metlife India Insurance Company Limited Vs Commissioner of Central Excise (CESTAT Bangalore)
CESTAT Bengaluru has held that Cenvat credit of service tax paid under reverse charge mechanism for availing services of insurance agents was available in a case when a portion of the premium amount (consideration towards output service), in case of ULIP policies, was not liable to service tax. It observed that the assessee was engaged only in rendering insurance services and merely because a portion of the premium amount (investment opportunity) charged in respect of ULIP policies was not liable to tax, it cannot be said that the said service was exempted, when tax was paid on the portion of premium collected on risk coverage. It held that provision of break-up of premium amount as shown in the policy was immaterial, as the subscriber had not taken two separate policies.
FULL TEXT OF THE CESTAT JUDGEMENT
The instant appeal has been filed by the assessee, M/s. Metlife India Insurance Co. Ltd., against demand of service tax, consequent to denial of CENVAT credit for the period from 1st April, 2005 to 15th May, 2008 alongwith interest under Section 75 of the Finance Act, 1994, (the Act) and penalty under Section 78 of the Act read with Rule 15(4) of the CENVAT Credit Rules, 2004 (the Credit Rules).
2. The facts of the case in brief are that the appellant is engaged in insurance business offering Life Insurance Policy (Term Insurance Policy), Endowment Policy and Unit Linked Insurance Policy (ULIP). During the period in dispute, premium money collected for Term Life Insurance and Endowment Life policies were fully taxable. In the case of ULIP, the premium is collected for two components – risk coverage portion and investment portion, the premium payable on the portion of risk coverage was only taxable, i.e. the premium attributable to investment portion was not taxable. Necessary break-up of premium for both the components are duly mentioned in the Policy document.
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