CESTAT Delhi Allows Shriram General Insurance's KKC, SBC Refund Claim On Cancelled Insurance Policies

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi has allowed Shriram General Insurance's claim for refund of ₹28.57 lakh paid towards Krishi Kalyan Cess (KKC) and Swachh Bharat Cess (SBC) on insurance policies that were subsequently cancelled.

The tribunal held that the refund could not be denied on the grounds of limitation or unjust enrichment after the insurer refunded the proportionate premium and tax component.

Judicial Member Binu Tamta and Technical Member P.V. Subba Rao held that the issue stood concluded by settled legal principles. The tribunal set aside the Department's order and held that Shriram General Insurance was entitled to a refund of KKC and SBC.

Shriram General Insurance had paid service tax, KKC and SBC on insurance premiums before the Goods and Services Tax (GST) regime came into force. Several insurance policies were later cancelled because of cheque dishonour, customer requests and reversal of premium owing to risk reduction.

Since no service had been provided wholly or partly, the insurer refunded the proportionate premium along with the tax component. It thereafter sought refund of KKC and SBC amounting to ₹28.57 lakh.

The department rejected the refund claim on the grounds of limitation and unjust enrichment. Aggrieved by the decision, the insurer approached the tribunal.

Before the tribunal, the insurer contended that the controversy was no longer res integra and relied on a series of earlier CESTAT decisions, including one rendered in its own case.

It also argued that once a refund of the service tax component had been allowed, KKC and SBC, being constituent components of the service tax levy, could not be treated differently. The Revenue fairly conceded that the issue was covered by the earlier decisions.

The tribunal referred to its earlier decisions on the issues of limitation and unjust enrichment. It noted that where no service is provided because an insurance policy is cancelled and the premium amount is returned, refund of the tax paid cannot be denied on those grounds.

For Appellant: Advocate Shivam Bansal,

For Respondent (Revenue): Mahboob Ur Rehman, Authorized Representative.