Broad input service definition allowed CENVAT refund for employee health insurance before the 01.04.2011 amendment.

For the period before 01.04.2011, insurance auxiliary service, including employee health insurance, could qualify as input service for CENVAT credit refund where it had a business nexus. The Tribunal accepted the broad pre-amendment scope of the input service definition and relied on Karnataka High Court decisions reading that expression expansively. It rejected the Revenue's nexus objection and found no error in the Commissioner (Appeals)' view that such insurance-related services connected with business and employee welfare fell within the eligible ambit. Refund of CENVAT credit on the insurance auxiliary service was therefore admissible and the Revenue's appeals failed.

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Issues: Whether refund of CENVAT credit attributable to insurance auxiliary service, including health insurance of employees, was admissible as input service for the period prior to 01.04.2011.

Analysis: The relevant period preceded the restrictive amendment of 01.04.2011, when the definition of input service was of wide amplitude. The Tribunal accepted the view that insurance services connected with the business and the welfare or protection of employees could fall within the ambit of input service, and found no infirmity in the Commissioner (Appeals) relying on the binding Karnataka High Court decisions that had adopted a broad interpretation of the expression. The Revenue's objection that the service lacked nexus with the output service was not accepted.

Conclusion: Refund of CENVAT credit on insurance auxiliary service was held admissible and the Revenue's appeals were rejected.

Ratio Decidendi: For the period prior to 01.04.2011, insurance services having a business nexus, including employee health insurance, could qualify as input service for CENVAT credit refund purposes.

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