Page 109 - 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 67
 Parallel can be drawn from Circular No. 94/5/2007-S.T., dated 15-5-
2007 wherein the entry and exit load charges of the Mutual Fund
were held not to chargeable to tax as they are not towards fund
management service.
 Similarly, in case of Container Detention charges the Board vide Cir-
cular No. 121/2/2010-S.T., dated 26-4-2010 held that the detention
charges is not a service but can be called penal rent and hence not
chargeable to tax.
 Drawing analogy from above, the surrender charges under ULIP
cannot be held as charges towards fund management and hence are
not taxable.
 Demand is also time-barred as the issue involved is of interpretation
and therefore no element of suppression, fraud or intention to evade
taxes can be made against appellant. The information of surrender
charges stands disclosed in books of account and also in balance
sheet as per the directions of IRDA. Hence it is not a case of sup-
pression.
Similar view has been taken by this Tribunal, that surrender charges are outside
the purview of service tax in Sriram Life Insurance Company vide Final Order Nos.
A/30187-30189/2019 (Hyderabad), dated 8-2-2019 [2019 (31) G.S.T.L. 442 (Tri. -
Hyd.)] wherein this Tribunal held as under :
In the said decision at Para 12, the Tribunal, held that since the surrender
charges were collected by the insurer, in exercise of its right to receive insurance
money from insurer the same is an actionable claim and therefore outside the
purview of service tax. The relevant extract of the said decision is reproduced
below :
“12. While, it is true that the expression of ‘Service’ under Section 65B(44) only
w.e.f. 1-7-2012, however, even for the period prior thereto the transaction in ques-
tion is a actionable claim and not a service. It has to be also noted that for the period
prior to 1-7-2012, for an activity to be tax it had to qualify as a taxable service in
one of the specified services. Since we are of the view, the transaction in question is
not a service at all but the transaction in a actionable claim hence could not have
been by any stretch of imagination covered under any of the specified taxable heads
of service even for the period prior to 1-7-2012.”
(emphasis supplied)
16. So far the demand for the period 2011-12 has been made, with re-
spect to surrender charges, form the life insurance policy in general, the Learned
Counsel states that the demand is wholly misconceived as the same logic applies,
which has been considered by Revenue for 2010-11. There being no change in the
provisions of Section 65(105)(zzzzf) read with Section 65(105)(zx).
17. The SCN as well as the impugned order rely on amendment in def-
inition and coverage of life insurance services in Section 65(105)(zx), to demand
service tax on surrender charges, during 2011-12. This is illegal and improper.
When there was no change in the coverage/definition of ULIP Management,
when surrender charges are related only to ULIP and when surrender charges
are accepted to be not taxable under 65(105)(zzzzf), service tax cannot be de-
manded on surrender charges under life insurance service.
18. Board Circular TRU No. - DOF No. 334/3/2011, dated 28-2-2011,
wherein Para 2.1 seeks to explain the amendment in the coverage of life insur-
ance services and states as follows :
GST LAW TIMES  7th May 2020  109