TaxTMI 
TaxTMI 
2021 (9) TMI 536
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....ned order, denial of credit of tax paid by them on procurement of 'brokerage', 'custodial charge', 'event management' and 'consortium charges' are disputed. Narrating the backdrop to fastening of tax liability of Rs. 1,85,23,176 and Rs.47,25,501 respectively. on 'brokerage' and 'custodial charge', he contends that these pertain to securities that are required to be invested in, pursuant to the mandate of the monetary policy of the Reserve Bank of India, announced from time to time, and which may be deviated from only at the peril of forfeiting their banking licence. It was contended this regulatory compulsion has the effect of erasing the element of 'choice', implicit in 'service', from the transaction as laid down by the Hon'ble High Court of Karnataka in Commissioner of Central Excise & Service Tax, LTU, Bangalore v. Micro Labs Ltd [2011 (270) ELT 156 (Kar)] thus '3. The question for consideration therefore is as to whether the assessees are liable to avail Cenvat credit towards payment of service tax on the Group Insurance Health policy. An identical question came up for consideration before the Division Bench in CEA 96/2009 and connected matters which were disposed off on 8-4....
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.... or indirectly in or in relation to the final product is entitled to claim the credit. Therefore, the Judgment of the Tribunal is legal and valid and is in accordance with law and does not suffer from any legal infirmity which calls for any interference.' 3. It was also pointed out that a Larger Bench of the Tribunal in South Indian Bank v. Commissioner of Customs, Central Excise and Service Tax, Calicut [2020 (6) TMI 278 - CESTAT Bangalore] was of the view that if the existence of the business itself was contingent upon procurement of a 'taxable service', its essentiality for rendering 'output service' cannot be called into question and held that '43. The contention advanced on behalf of the banks is that the insurance service rendered by the Deposit Insurance Corporation to the banks is covered under the main part of the definition of "input service" and, therefore, the banks are justified in availing Cenvat credit on this "input service" for the "output service" rendered by the banks in relation to "banking and other financial services". The contention of the Department is that since insurance is paid on the deposits and the activity of acceptance of deposits is a trans....
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....for him a benefit of the policy holder." Life policies are now construed not as contracts of indemnity but to pay a certain sum in a certain event depending on the duration of human life." The judgment of the Hon'ble High Court of Bombay in the case of Insure Policy Pius Services Pvt. Limited was affirmed by Apex Court as reported at 2016 (2) SCC 507. In our view, the judgments and the ratio thereto clearly supports the contention of the appellant that life insurance policy/the right to receive insurance policy money is an actionable claim. The exercise of the right to receive insurance money by the insured is an activity which is a transaction in actionable claim and is outside the scope of the definition of service. In our view, the amounts entered as surrender/discontinuance charges in the appellant assessee's books of account are not consideration for any service rendered by them, but it represents the amount that is retained by insurer on the insured, exercise his right to receive the insurance money. The entirety of the transaction being (sic) in actionable claim is outside the purview of the service tax and does not get covered under provisions of Finance Act, 1994.' it w....
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.... on 'brokerage' and 'custodial charge', submitted that the activity for which these services were procured does not result in 'output service' within the meaning of CENVAT Credit Rules, 2004. According to him, the same activity for the benefit of other recipients of service would lie within the meaning of 'banking and other financial services' whereas the impugned activity is nothing but 'trading in securities' which is exempt and, therefore, not eligible for availing the tax paid as credit. For this, he placed reliance on rule 6 of CENVAT Credit Rules, 2004 and the non- taxability arising from the deeming of securities as 'goods' for tax purposes. As far as the disallowance of credit on procurement of 'event management service' is concerned, he contends that the activity has nothing to do with rendering of 'output service' and is merely utilized for celebrating their annual day. He contends that the credit taken on 'consortium charge' is without authority of law as the requirements in rule 4A of Service Tax Rules, 2004 had not been complied with; the description of the service, and classification thereof under appropriate taxable entry, is absent in the documents against which cre....
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....on'ble High Court of Bombay in Commission of Central Excise, Nagpur v. Manikgarh Cement [2010 (20) STR 456 (Bom.)]were also referred to. 10. Taking up the issue of denial of CENVAT credit for incomplete documentation, it is settled law that procedural infirmities cannot stand in the way of availment of substantive benefit. In Sambhaji and Others v. Gangabai and Others [(2008) 17 SCC 117], the Hon'ble Supreme Court asserted that '12. Processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. A Procedural prescription is the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice.' and in Mangalore Chemicals & Fertilisers Ltd v. Deputy Commissioner [1991 (55) ELT 437 (SC)], it was held by the Hon'ble Supreme Court that '11....In Kedarnath's case, the question for consideration was whether the requirement of the declaration under the proviso to Section 5 (2) (a) (ii) of the Bengal Finance (Sales-tax) Act, 1941, could be established by evidence aliunde. The court said that the intention of the Legislature was to grant exemptions only upon the satisfaction of the substantive condition o....
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....he case of the tax authorities that the services of State Bank of India had not been deployed in the consortium led by them or that tax liability had not been included in the consideration made over to the provider of service. It is also not the case of the service tax authorities that the provider of service is not in the business of 'banking and other financial service'; nor is it the contention that the 'output service' afforded by the consortium, which included the appellant, is not taxable. The denial of credit merely for want of description of service or classification thereof, which are primarily intended for statistical reference, should not be allowed to impede availment of credit as substantive eligibility, prescribed in CENVAT Credit Rules, 2004 is not assailed by Revenue. 11. The issue on 'event management service' and its connection with 'output service' of organisations has been settled by the decision of the Tribunal in re Endurance Technologies Pvt Ltd. The reliance placed upon the decision of the Hon'ble High Court of Rajasthan in re Bansal Classes would not apply to the facts of the present dispute inasmuch as the activities therein, concerned with programm....