2020 (2) TMI 607 - AT - Service Tax

Tribunal allows service tax credit for workmen's insurance premium, overturns denial, validates business expense

M/s Checkmate Industrial Guards Pvt. Ltd. Versus Commissioner of Central Goods & Service Tax, Noida

The Tribunal held that the service tax paid on the workmen compensation insurance premium was admissible as cenvat credit for a business providing ... CENVAT credit - input services or not - workmen compensation insurance policy in respect of employees - HELD THAT:- It is very clear that the appellant is engaged in providing security services and detective agency service. To cover the risk of bearing the liability of payment of compensation to the employees in case of any mis-happening, appellant subscribed to said insurance policy for their employees - Therefore, the expenditure incurred was for running of the business and therefore, the said service has to be held to be input service. Therefore, the service tax paid on workmen compensation insurance premium is admissible as cenvat credit. Credit allowed - appeal allowed - decided in favor of appellant. Issues:1. Admissibility of service tax paid on premium of insurance policy as input service cenvat credit for security and detective agency services.Analysis:The case involved a dispute regarding the admissibility of service tax paid on the premium of an insurance policy as input service cenvat credit for a business providing security services and detective agency services. The appellants had subscribed to a workmen compensation insurance policy to cover the liability of paying compensation to employees in case of any mishap occurring while they were on duty. The Revenue contended that the service tax paid on the insurance premium was not admissible as cenvat credit, leading to proceedings being initiated for the denial of credit amounting to Rs. 1.15 lakhs.The Original Authority disallowed the cenvat credit, which was confirmed by the learned Commissioner (Appeals), prompting the appellants to approach the Tribunal. The appellant's counsel argued that the insurance policies were meant to cover the appellant's liability for compensation payments in case of employee mishaps, with the premiums being borne by the appellant and not the individuals covered by the policies. On the other hand, the Authorized Representative supported the Order-in-Appeal.After considering the submissions and examining the records, the Tribunal concluded that the appellant was indeed engaged in providing security services and detective agency services. The insurance policy was taken to mitigate the risk of bearing liability for compensating employees in case of mishaps, making it an expenditure necessary for running the business. Consequently, the Tribunal held that the service tax paid on the workmen compensation insurance premium was admissible as cenvat credit. The impugned order disallowing the credit was set aside, and the appeal was allowed, entitling the appellants to any consequential relief as per the law.