2017 (11) TMI 1646 - AT - Service Tax

Appellant successful in service tax and cenvat credit appeal

The Tribunal ruled in favor of the appellant on both counts, allowing the appeals related to the claim of service tax paid on rent-a-cab service for ... CENVAT credit - rent-a-cab service - insurance service received to insure the life of employees and their family member - Held that: - In respect of rent-a-cab services availed, whether the vehicle was capital goods was not proved by Revenue. It does not appeal to common sense as to how a service recipient having no scope to know whether the motor vehicle was capital goods or not shall face adversity even though he has paid tax on the service of rent-a-cab availed - credit allowed. Insurance service received to insure the life of employees and their family member - Held that: - taking into consideration the appellant was a manufacturer, its employees including their family members are insured, there should not be denial of cenvat credit since insuring workers has integral connection with manufacture - So also health insurance being requisite of labour welfare legislation, denial of cenvat credit of service tax paid on insurance service availed for the employees welfare would be unreasonable - credit allowed. Appeal allowed - decided in favor of appellant. Issues Involved:1. Claim of service tax paid on rent-a-cab service for transporting employees and promoting business.2. Denial of cenvat credit for insurance service covering employees and their family members.Analysis:Issue 1: Claim of service tax paid on rent-a-cab serviceThe appellant claimed that the service tax paid on rent-a-cab service was for transporting its employees to the factory and promoting its business. However, the credit of such tax was not allowed under sub-clause (B) introduced to the exclusion clause of Rule 2(l) of Cenvat Credit Rules, 2004. The question of whether the vehicle was considered capital goods or not was raised, and it was mentioned that it was beyond the appellant's scope to know. The Revenue failed to prove that the vehicle was capital goods, and it was deemed unreasonable to deny the credit when the appellant had paid tax on the service. The Tribunal ruled in favor of the appellant on this count.Issue 2: Denial of cenvat credit for insurance serviceThe second count involved the denial of cenvat credit for insurance services received to insure the lives of employees and their family members. The appellant argued that such services were integrally connected to the business and manufacturing activities, and thus, the credit should not be denied. The Tribunal considered the importance of insuring workers under labor welfare legislation and as a measure of compensation under the Workmen's Compensation Act. Referring to a previous order, the Tribunal held that denying cenvat credit on insurance services for employees' welfare would be unreasonable and contrary to basic principles of jurisprudence. Consequently, the Tribunal allowed both appeals on this count as well.In conclusion, the Tribunal ruled in favor of the appellant on both counts, allowing the appeals related to the claim of service tax paid on rent-a-cab service and the denial of cenvat credit for insurance services covering employees and their family members.