Input service credit on employee group health insurance upheld as business-related and statutorily connected

Service tax paid on group health insurance premium for employees was treated as an input service because employee insurance was regarded as an activity relating to business and connected with the employer's statutory and business obligations. The analysis relied on binding precedent and noted the statutory obligation to insure employees under section 38 of the Employees State Insurance Act, 1948. CENVAT credit was therefore held admissible on the premium paid for employee group health insurance.

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Issues: Whether service tax paid on group health insurance premium taken for employees qualifies as input service under rule 2(l) of the CENVAT Credit Rules, 2004 and whether CENVAT credit is admissible.

Analysis: The issue was treated as covered by binding precedent holding that group health insurance for employees is connected with the employer's statutory and business obligations. The service was regarded as an activity relating to business and, therefore, within the scope of input service. Reference was also made to the statutory obligation to insure employees under section 38 of the Employees State Insurance Act, 1948.

Conclusion: CENVAT credit on the service tax paid on group health insurance premium for employees is admissible and the issue is answered in favour of the respondent.

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