Pre-2011 employee medical insurance qualifies as input service for Cenvat credit under the broad business nexus test.

Cenvat credit on employee medical insurance service for the period before 1-4-2011 was treated as admissible under Rule 2(l) because the pre-amendment definition of input service covered services used directly or indirectly in relation to manufacture and business activities. Settled precedent was followed to hold that group health insurance for employees had a sufficient nexus with business operations, and the later specific exclusion for life insurance and health insurance supported the view that such services had fallen within the earlier broader ambit. The Revenue challenge was rejected on the basis of binding earlier decisions.

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Issues: Whether Cenvat credit on medical insurance service availed for employees for the period prior to 1-4-2011 is admissible as an input service under Rule 2(l) of the Cenvat Credit Rules, 2004.

Analysis: The disputed period was prior to the amendment of 1-4-2011, when the definition of input service included services used directly or indirectly in or in relation to manufacture and also activities relating to business. The Tribunal followed settled precedent holding that group health insurance / medical insurance for employees is connected with business operations and falls within the broad pre-amendment definition of input service. The exclusion introduced later for life insurance and health insurance reinforced that such services were within the earlier ambit. The Revenue's challenge was rejected in light of the binding nature of the earlier High Court and Tribunal decisions.

Conclusion: Cenvat credit on medical insurance service was admissible and the Revenue's appeal failed.

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