Supreme Court Issues Notice On Birla Sun Life Insurance's Plea Against Service Tax On Life Insurance Charges
The Supreme Court on Friday issued notice on Birla Sun Life Insurance Co. Ltd.'s special leave petition challenging a Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai order that partly upheld service tax demands on charges collected from life insurance policyholders.
The Tribunal, in its April 10, 2026 order, set aside service tax demands on surrender, discontinuation and foreclosure charges, relying on its earlier rulings in similar cases involving life insurance companies.
However, it upheld the service tax liability on reinstatement charges and the penalty imposed under Section 78 of the Finance Act, 1994. The Tribunal rejected the company's plea that its bona fide belief that no service tax was payable justified setting aside the penalty.
A Bench of Justices B.V. Nagarathna and R. Mahadevan issued notice to the Commissioner of CGST and directed that the matter be tagged with a pending case raising a similar issue.
“Issue notice to the respondent. Tag with Civil Appeal arising out of Diary No. 11968 of 2023,” the Court said.
Appearing for Birla Sun Life Insurance, counsel submitted that a similar issue was already pending before the Supreme Court in another matter and requested that the present matter be tagged with that case.