In a major relief to M/S Bajaj Allianz General Insurance Company Ltd, the Supreme Court has upheld the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) wherein the Tribunal deleted the addition of service tax on a premium in terms of the insurance policy covering the future period at revised rates on the entire premium was paid prior to 10.09.2004 i.e. before the change in the rate of tax.
The department approached the Supreme Court contending that the Tribunal was wrong in holding that the service tax was payable on a premium in terms of the insurance policy covering the future period at revised rates, if the rates are revised by law during the operation of policy already issued and service tax liability is discharged.
A two-judge bench comprising Justice M R Shah and Justice Krishna Murari observed that “The learned Tribunal, by a detailed judgment and order, and considering the fact that the entire premium was paid prior to 10.09.2004 i.e. before the change in the rate of tax, has rightly observed and held that the assessee is not liable to pay the enhanced rate of tax. We are in complete agreement with the view taken by the Tribunal. The Appeal stands dismissed.”
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