CENVAT credit on labour insurance and statutory employee payments upheld where tax was validly paid on the taxable value.

CENVAT credit is treated as admissible on service tax paid for workmen compensation insurance taken for contract workmen, where the insurance relates to contract labour and the issue is covered by Tribunal precedent. Credit is also treated as admissible on service tax paid on the gross taxable value charged for manpower supply services, including statutory employee-related payments reimbursed by the assessee. The commentary states that credit cannot be denied in either category when tax has been validly paid and the same questions have already been decided in favour of entitlement.

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Issues: (i) Whether CENVAT credit was admissible on service tax paid on workmen compensation insurance taken for contract workmen; (ii) Whether CENVAT credit was admissible on service tax paid on statutory benefits extended by the service provider and reimbursed by the assessee.

Issue (i): Whether CENVAT credit was admissible on service tax paid on workmen compensation insurance taken for contract workmen.

Analysis: The insurance was taken in respect of contract workmen in terms of Section 38 of the Employees State Insurance Act, 1948, and the service tax paid by the service provider was availed as credit. The objection that such credit was unavailable after 01.04.2011 was rejected in an earlier decision of the same Bench, and the issue was treated as covered by Tribunal precedent.

Conclusion: CENVAT credit was held admissible and the assessee's appeal was allowed.

Issue (ii): Whether CENVAT credit was admissible on service tax paid on statutory benefits extended by the service provider and reimbursed by the assessee.

Analysis: The service provider discharged tax under manpower recruitment and supply agency services on the gross amount, including statutory payments made to its employees. The same question had earlier been decided by the same Bench in favour of credit entitlement, and the earlier ratio was applied to the present case.

Conclusion: The Revenue's challenge was rejected and the impugned order allowing credit was upheld.

Final Conclusion: The cross appeals were disposed of by granting relief on the assessee's claim and rejecting the Revenue's challenge, with credit entitlement sustained on both disputed categories.

Ratio Decidendi: CENVAT credit cannot be denied where service tax has been validly paid on insurance for contract labour or on gross taxable value including statutory employee-related payments reimbursed to the service provider, especially when the issue is covered by binding Tribunal precedent.

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