Page 105 - GSTL_7th May 2020_Vol 36_Part 1

2020 ]MAX LIFE INSURANCE CO. INDIA LTD. v. COMMR. OF C.E. & S.T., LTU, NEW DELHI 63
C.B.E. & C. Circular No. 96/7/2007-S.T., dated 23-8-2007 ................................................................ [Para 22]
I.R.D.A. Circular No. 055/IRDA/Actl/ULIP/2009-10, dated 24-9-2009 ........................................ [Para 21]
C.B.E & C. Letter DOF No. 334/1/2010-TRU, dated 26-2-2010 .................................................. [Paras 8, 32]
C.B.E. & C. Circular No. 121/02/2010-ST, dated 26-4-2010 .............................................................. [Para 22]
C.B.E. & C. Letter DOF No. 334/3/2011-TRU, dated 28-2-2011 ....................................................... [Para 18]
C.B.E. & C. Letter No. 137/25/2011-S.T., dated 3-8-2011 .................................................................. [Para 22]
REPRESENTED BY : Shri Sanjeev Sachdeva, Ms. Neha Gulati, Advocates,
for the Appellant.
Shri Amresh Jain, Authorised Representative, for the
Respondent.
[Order per : Anil Choudhary, Member (J)]. - The issue in the present
case is whether Service Tax under the category of “Management of Investment
under ULIP service” is leviable on surrender charges, which are deducted from
fund value, as per policy provisions for premature withdrawal from the scheme.
2. With effect from 16-5-2008, the activity of Management of Invest-
ment under ULIP was brought under the Service Tax net in form of Clause
(105)(zzzzf) of Section 65 of the Act i.e. “Management of Investment under ULIP
service”.
3. Sometimes the policyholder or the insurer opts for premature termi-
nation of the policy. In such case, the insurer/appellant levy surrender charges,
which is deducted from the fund value or the benefit value accrued in the policy.
The appellant in the business of life insurance and provides several products
which are broadly classifiable into term plan product, Unit Linked Insurance
Plan (ULIP), etc., vide show cause notice dated 16-4-2014, invoking the extended
period of limitation, service tax was demanded on surrender charges for the fol-
lowing period :

1-10-2008 to 30-6-2010 Demand under ULIP Management service
1-7-2010 to 30-4-2011 No demand (dropped in Adju.)
1-5-2011 to 30-6-2012 Demand under Life Insurance service

4. Section 65(105)(zzzzf) of the Finance Act, 1994 defines taxable ser-
vice, provided or to be provided to a policyholder, by an insurer carrying on life
insurance business, in relation to management of investment under Unit Linked
Insurance business, commonly known as Unit Linked Insurance Plan (ULIP)
scheme. Explanation for the purpose of this sub-clause :
(i) management of segregated fund of unit linked insurance business by the
insurer shall be deemed to be the service provided by the insurer to the poli-
cyholder in relation to management of investment under unit linked insur-
ance business; and
(emphasis supplied)
(ii) the gross amount charged by the insurer from the policyholder for
the said services provided or to be provided shall be equivalent to
the difference between, -
(a) premium paid by the policy holder for the Unit Linked Insur-
ance Plan policy; and
(b) the sum of premium paid for or attributable to risk cover,
whether for life, health or other specified purposes, and the
amount segregated for actual investment.
GST LAW TIMES  7th May 2020  105