DISTRICT CONSUMER DISPUTES REDRESSAL FORUM,

BATHINDA (PUNJAB)

CC No. 316 of 15-07-2010

Decided on : 27-01-2011

Gopal Krishan S/o Sh. Bhushan Lal Bansal aged about 24 years R/o Amrit Lal Bansal & Sons, Commission Agent, Grain Market, Bhucho Mandi, District Bathinda.

.... Complainant

Versus

Reliance Life Insurance Co. Ltd., Sukhdev Singh Ahluwalia Complex, Ground Floor, Hazi Rattan Chowk, Bathinda, through its Branch Manager

.... Opposite party

Complaint under Section 12 of the Consumer Protection

Act, 1986.

 

QUORUM

Ms. Vikramjit Kaur Soni, President

Dr. Phulinder Preet, Member

For the Complainant : Sh.Naresh Garg, counsel for the complainant

For the Opposite party : Sh. Sanjay Goyal, counsel for the opposite party.

O R D E R

VIKRAMJIT KAUR SONI, PRESIDENT

1. This complaint has been filed by the complainant under Section 12 of the Consumer Protection Act, 1986 as amended upto date (here-in-after referred to as 'Act'). The complainant purchased one Life Insurance Policy No. 10302384 from the opposite party w.e.f. 05-09-2006 for 20 years after paying annual premium Rs. 26,275/- i.e. Rs. 25,775/- for Basic Benefit (Sum Insured Rs. 5.00 Lacs) and Rs. 500/- for Accident Benefit (Sum Insured Rs. 5.00 Lacs). The complainant paid yearly premium of Rs.26,275/- due in Sept, 2007, Sept, 2008 and Sept, 2009 in due time respectively. The above said Insurance of the complainant is Tradition Endowment Insurance Plan (Child Plan) and the same is Non ULIP Insurance Plan. In the month of September, 2009, the opposite party illegally charged Rs. 26,600/- as annual premium against the above said insurance from the complainant against the annual premium of Rs. 26,275/-. The complainant having no other alternative deposited the amount of Rs.26,600/- on 17-09-2009 with the opposite party. On the next day, he lodged protest with the opposite party regarding enhancement of premium without any reason but the official of the opposite party said that they charged the Service Tax on the basic premium and on the accident rider as per Notification No. 8/2009-Service Tax dated 24-02-2009 and told that the same is applicable on the policy holder w.e.f. 01-06-2009. The complainant has alleged that in this complaint, the insurance contract was issued in 2006 after that there is no such Govt. Notification regarding any Service Tax etc., on Traditional Insurance Policies but the opposite party has charged the same from their policy holder. In this regard, he has taken support of law laid down by the Hon'ble Supreme Court in the case 2008(2) CPJ 38 (SC) & 2008(4) RCR Civil 173 (SC). As per Chapter 58 (Life Insurance Service) of the Service Tax Act in Chapter 58.5 the Section 66 of the Act if not applicable where the entire premium paid by the policy holder is only towards risk cover in life insurance or......., but the opposite party knowingly and with a the malafide intention charged the Service Tax from the Policy Holders w.e.f. 01-06-2009 of the policies issued by them in 2006. This is also a unfair trade practice and in this regard he has taken support of law laid down by the Apex Court in the case titled H.N. Shankar Shastry Vs. The Asstt. Director of Agriculture 2004(3) RCR Civil 176. The complainant has alleged that the opposite party is charging the illegal amount of Rs.325/- in the yearly premium of the insurance of the complainant. Hence, this complaint for issuing directions to the opposite party to refund the amount charged in excess alongwith interest; not to charge any enchanced premium by charging service tax etc., in future from the complainant and also pay him compensation and costs.

2. The opposite party has filed the written reply by taking legal objections that this Forum is not competent to decide the present complaint as the matters involved relates to imposition of tax on Insurance and the complainant may file Public Interest Litigation before Hon'ble High Court or Hon'ble Supreme Court. On merits, it has been pleaded that the tax if any imposed by Government is to be paid by complainant as per the policy which is duly received by the complainant and it has been duly mentioned in clause No. 22 of terms and conditions. The complainant had purchased Child Plan. The demand was correct because service tax including education cess and higher education cess was imposed by Government of India as such, same was payable on all the policy holders and the amount received from policy holder was to be remitted to Government of India. As per notification No. 23/2004, the service tax exemption was rescinded.

3. Parties have led their evidence in support of their respective pleadings.

4. Arguments heard and written submissions submitted by the parties perused.

5. The learned counsel for the complainant submitted that the complainant had purchased Insurance policy No. 10302384 from the opposite party w.e.f. 05-09-06 for 20 years after paying annual premium of Rs. 26,275/- i.e. Rs. 25,775/- for Basic Benefit (Sum Insured Rs. 5.00 Lacs) and Rs. 500/- as Accident Benefit (Sum Insured Rs. 5.00 Lacs for Accident) The complainant is continuously paying yearly premium of Rs. 26,275/- due in Sept, 2007, Sept, 2008 and Sept, 2009. The above said Insurance policy of the complainant is Tradition Endowment Insurance Plan ( Child Plan) and is Non ULIP Insurance Plan. In the month of September, 2009, the opposite party charged Rs. 26,600/- as annual premium against the annual premium of Rs. 26,275/-. The complainant deposited the excess amount and lodged a complaint with the opposite party for the enhancement of premium, without assigning any reason for charging Service Tax on the basic premium and on the Accident Rider as per Notification No. 8/2009-Service Tax dated 24-02-2009. The notification dated 24-02-2009 is applicable on the policy holder w.e.f. 01-06-2009. As per said notification, Government of India has never levied any service tax on any insurance policy. The complainant has taken support of law laid down by the Hon'ble Supreme Court in the case reported as 2008(2)CPJ 38 (SC) and 2008 (4) RCR Civil 173 (SC) wherein it has been held that the Insurance is contract like any other contract and the same is not a statutory in nature. The opposite party has charged Rs. 325/- in excess from the complainant. As per Chapter 58 (Life Insurance Act) of Service Tax Act in Chapter 58.5 the Section 66 of the Act is not applicable where the entire premium paid by the Policy Holder is only towards Risk cover in life Insurance, but the opposite party has charged service tax from the policy holders w.e.f. 01-06-2009 of the policies issued by them in 2006.

6. The learned counsel for the opposite party has submitted that vide notification No. 23/2004 Govt. of India has rescinded the notification of Govt. of India regarding exemption of service tax. Hence, tax if any imposed by Government is to be paid by complainant as per policy.

7. For facility of reference salient portion of Notification Ex. R-4 is extracted below :

“Notification No. 23/2004 – Service Tax

G.S.R. (E) – In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby rescinds the notifications of the government of India in the Ministry of Finance (Department of Revenue), No. 4/99 – Service Tax, dated the 28^th February, 1999 (G.S.R. 187 (E) dated the 28the February, 1999) and No. 9/2002 – Service Tax, dated the 1^st August, 2002 (G.S.R. 537 (E) dated the 1^st August, 2002) except as respects things done or omitted to be done before such rescission.”

Notification No. 8/2009 Ex. C-10 reads as under :-

“(To be published in the Gazette of India extraordinary in Part II, Section 3, Sub Section (i)).

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(Department of Revenue)

New Delhi dated the 24^th February, 2009

 

Notification No. 8/2009 – Service Tax

 

G.S.R. (E) – In exercise of the powers conferred by sub-section (1) of Section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act) the Central Government on being satisfied that it is necessary in the public interest so to do, hereby exempts all the taxable services specified in sub-section 105 of section 65 of the Finance Act from so much of service tax leviable there on under section 66 of the Finance Act, as is in excess of the rate of ten percent of the value of taxable services.”

Notification No. 9/2002 Ex. R-3 is reproduced hereunder :-

“Notification No. 9/2002 – Service Tax 1^st August, 2002

In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do hereby exempts the taxable service provided, by an insurer carrying on life insurance business, to a policy holder in relation to life insurance business from the whole of the service tax leviable thereon under Section 66 of the said Act.

2. This notification shall come into force on the 16^th day of August, 2002.”

8. Chapter 58 Life Insurance Service and 58.5 Option to Service provider C-11 are reproduced hereunder :-

   “What is life insurance business ?

   58.1 As already explained in Chapter 50, services connected with general insurance business were brought within the purview of service tax with effect from 1.7.1994. The Finance Act, 2002 brought services connected with life insurance business also into the service tax net with effect from 16-08-2002 (vide Notification No. 9/2002 ST, dated 1-8-2002) and simultaneously granted exemption to the service also. Department clarification issued at that time is given as Annex 58.1. The exemption notification is now withdrawn with effect from 10-09-2004 (vide Notification No. 23/20040ST dated 10-09-2004). For this purpose, the term life insurance business has been defined in the Act.

   Option to service provider

   58.5 Under sub-rule (7A) of rule 6 of the Service Tax Rules, inserted with effect from 10-09-2004, an insurer carrying on life insurance business liable for paying the service tax in relation to the risk cover in life insurance provided to a policy holder shall have the option to pay an amount calculated at the rate of one percent of the gross amount of premium charged by such insurer towards the discharge of his service tax liability instead of paying service tax at the rate specified in section 66 of the Act. However, such option shall not be available in cases where -

   (a) the entire premium paid by the policy holder is only towards risk cover in life insurance; or

   (b) the part of the premium payable towards risk cover in life insurance is shown separately in any of the documents issued by the insurer to the policy holder”

9. A perusal of above said notifications reveals that service tax of the life insurance is not leviable. Thus, it appears that the opposite party has mis-interpreted the notification Ex. R-4. Moreover, the opposite party has no where in his reply or in his affidavit has given the reasoning as to why the Notification dated 24^th Feburary, 2009 is not applicable in the present case. Hence, there is deficiency in service on the part of the opposite party in charging the service tax from the complainant.

10. The opposite party has raised objection that this Forum is not competent to decide the present complaint as the matter involved relates to imposition of tax on insurance and the complainant may file Public Interest Litigation before Hon'ble High Court. This Forum is of the view that this Forum is competent to adjudicate this complaint as the provisions of Section 3 of the Act are in addition to and not in derogation of any other provisions of any other law for time being enforced.

11. In view of above discussion, this complaint is accepted with Rs. 500/- as compensation and cost. The opposite party is directed to refund the amount charged in excess from the complainant i.e. 325/- to him.

    The compliance of this order be made within 30 days from the date of receipt of copy of this order. A copy of this order be sent to the parties concerned free of cost and the file be consigned to record.

Pronounced

27-01-2011

(Vikramjit Kaur Soni)

President

(Dr. Phulinder Preet)

Member