Rs 3,000-cr 'misrepresentation': Insurance organizations to approach Arun Jaitley over assessment strikes - See more at:

Insurance agencies guarantee the seizures are unjustified and that officers of the Directorate General of Central Excise Intelligence (DGCEI) treated workers "cruelly" and "irritated them" amid pursuit operations. 

The administration cases to have revealed an immense administration charge misrepresentation in engine vehicle protection, with affirmed assessment avoidance to the tune of just about Rs 3,000 crore. In the biggest such expense related inquiry focusing on an industry at one go, authorities have seized records from all insurance agencies that offer engine vehicle protection. The overview operations were led at the head workplaces of all broad insurance agencies in Chennai, Pune and Mumbai in the previous couple of weeks. The organizations, thus, have chosen to approach Finance Minister Arun Jaitley to dissent against the move. Insurance agencies assert the seizures are unjustified and that officers of the Directorate General of Central Excise Intelligence (DGCEI) treated representatives "brutally" and "hassled them" amid inquiry operations.

On Friday, the companies, including Bajaj Allianz, HDFC Ergo, ICICI Lombard and Reliance General, approached the insurance regulator to support them in their protest. A copy of their joint representation, accessed by The Indian Express, states that while conducting the surveys, tax officials “wrote the statements as they liked and forced officials of the companies to sign such statements”. The issue is as follows: When a customer walks into a car showroom, he usually has no particular preference regarding the company to insure his car with. The dealer often guides the customer. Insurance companies pay dealers for this guidance in the form of commission. Insurers also pay dealers the cost of advertisements for their showrooms as well as other such incentives. These incentives are taxable items under service tax and the insurance paperwork is maintained by motor vehicle dealers. While insurance companies claim tax credit for the service tax paid to automobile dealers, DGCEI officials allege that the dealers have not provided most of the services the insurance companies claimed credit for to reduce their service tax dues. “The tax officers have collected statements from employees of large motor dealers as well as those working with insurance companies to build up their case,” a government official said. The dispute could hit general insurance companies hard if they are forced to recalibrate their service tax dues. The liabilities for larger companies run into several hundred crores each. The demand could also impact the plans of some of these companies to attract higher foreign investment of up to 49 per cent, allowed by the government this year through an amendment of the Insurance Act. Spokespersons of Bajaj Allianz, ICICI Lombard and Reliance General — the leaders in the motor insurance business — did not comment on the development. While tax officials have also checked the records of the public sector insurance companies, since they also sell motor policies, a government source said it was for purposes of corroboration only. The latest development could be a dampener for the general insurance industry, which has been struggling to break even. In the race to gather the maximum premium, the comprehensive cover in the motor insurance business is the most profitable bulk segment, and all leading companies have established huge networks with motor vehicle companies. A government source said some of these companies had earlier sounded out the Insurance Regulatory and Development Authority for taking up their cause with the Central Board of Excise and Customs on a related issue. At the time, the regulator T S Vijayan had decided not to get involved, saying it has to be tackled by the companies themselves. But in view of the tax operations, the regulator has decided to examine the demand afresh.