TaxTMI 
TaxTMI 
2024 (6) TMI 130
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.... credit of service tax paid on inputs, capital goods and input services received by them for providing output services in terms of Cenvat Credit Rules, 2004 (CCR). During the course of audit of accounts of the appellant, the departmental officers have noticed that the Cenvat credit availed on various input services are not eligible as per the provisions of Rule 2(l) ibid. On coming to such a conclusion, show cause notices were issued for recovery of wrongly availed and utilized Cenvat credit under Section 73(1) of the Finance Act, 1994 read with Rule 14 of the Cenvat Credit Rules, 2004 along with applicable interest and for imposition of penalty under Rule 15(1) ibid. Initially, SCN dated 09.10.2015 was issued proposing for recovery of wrongly availed Cenvat credit on input services viz., Rent a Cab services, insurance services covered during the disputed period from 01.04.2010 to 31.03.2014 for an amount of Rs.3,06,91,923/-. Further, periodical demand cum SCN dated 04.02.2016 was issued for recovery of wrongly availed Cenvat credit on input services viz., Rent-a-Cab services for an amount of Rs.1,97,848/-, insurance-vehicle, group, travel, medical services for an amount of Rs. 13,....
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....rce is available for uninterrupted provision of output service to avoid loss of man-hours, disruption of business activity. He also stated for the Cenvat Credit taken by the appellant on bona fide belief as permitted under the law and its utilization for the provision of output service, but proposed for recovery due to the technical objection of the department, cannot be a ground for imposition of penalty. 3.3 Learned Consultant relied upon the following judgments in support of their stand :- (i) Reliance Industries Ltd. Vs. Commissioner of C. Ex. & S.T., LTU, Mumbai - 2016 (45) S.T.R. 383 (Tri.- Mumbai) (ii) Reliance Industries Ltd. Vs. Commissioner of C. Ex. & S.T.(LTU), Mumbai - 2015 (38) S.T.R. 217 (Tri.- Mumbai) (iii) Commissioner of C. Ex. & Service Tax, (LTU), Bangalore Vs. Micro Labs Ltd., - 2011 (270) E.L.T. 156 (Kar.) (iv) Commissioner of C. Ex., Bangalore-III Vs. Stanzen Toyotetsu India (P) Ltd., - 2011 (23) S.T.R. 444 (Kar.) (v) Oceans Connect India Pvt. Ltd. Vs. Commissioner of C. Ex., Pune- III - 2016 (46) S.T.R. 858 (Tri.- Mumbai) (vi) Commissioner of C. Ex., Nagpur Vs. Ballarpur Industries Ltd., - 2007 (215) E.L.T.489 (S.C.) (vii) Cement Marke....
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....ing the same. It is an undisputed fact of the case that central excise duty and service tax has been paid on the inputs and input services respectively. There is no dispute that the appellant is eligible to avail Cenvat credit. The dispute is relating to whether these services are used in or in relation to the provision of output service. The services which are in dispute are Rent-a-Cab Operator's service and the insurance service. 6.2 It can be seen from the factual matrix of the case that both the said services were utilized by the appellant during the course of activity of providing output service. For example, the technicians and the engineers who are required to visit the various locations in which the telecom towers are situated for providing output service of maintenance and repair, have to travel different locations, by carrying suitable spare parts, maintenance tools, replacement consumables, diesel for running DG sets etc. In all such situations, transportation of personnel employed for providing output services by the appellant, by using Rent-a-Cab Operator service for their movement are essential and are directly linked in providing output service. Further, providing ....
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....y in respect of a motor vehicle insured or reinsured by such person; or (C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee. Explanation.-For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis." 7.2 On careful reading of the definition of 'input service' under Rule 2 (l) of CCR, 2004 as above, I find that it provides for three categories of services, out of which (i) 'means' part of the definition, generally cover services which are used directly or indirectly, in or in relation to manufacture of final goods or for providing of output services; and (ii) 'inclusion' part of the definition, specifically state certain services used in relation to various activities, which is used in relation to the manufacture of final products or provision of output services, both of which are covere....
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....ly:- (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, 1[heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 and wagons of sub-heading 860692of the First Schedule to the Excise Tariff Act; (ii) pollution control equipment; (iii) components, spares and accessories of the goods specified at (i) and (ii); (iv) moulds and dies, jigs and fixtures; (v) refractories and refractory materials; (vi) tubes and pipes and fittings thereof; (vii) storage tank; and (viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis but including dumpers and tipper, used- (1) in the factory of the manufacturer of the final products; or (1A) outside the factory of the manufacturer of the final products for generation of electricity or for pumping of water for captive use within the factory; or (2) for providing output service, (B) motor vehicle designed for transportation of goods including their chassis registered in the name of the service provider, when used for- (i) providing an output service of renting of such motor vehicle; or (ii) transportation ....
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....e Cenvat credit availed on input services in respect of insurance services, I find that to the extent that such services are not used primarily for personal use or for consumption of any employee, they would qualify as eligible 'input service' by being not specifically covered under the clause (C) of Rule 2(l) ibid. The sample invoices produced by the appellant indicate that these are for 'Corporate Fire and Allied Perils insurance' policy provided by the New India Assurance Co. Ltd., 'Group Protection Solution Plan' provided by Birla Sun Life Insurance, 'Workmen Compensation Policy' provided by the New India Assurance Co. Ltd., etc. As the insurance services as above are in the nature of services availed for providing output service in terms of ensuring that the office premises, personnel employed for providing output service are protected for providing continuous and uninterrupted service, these can be categorised as being in the nature of insurance service for personal use or consumption of employees. Thus, I find that these services are not covered under the exclusion clause (C) of Rule 2(l) ibid. 8.2 I find that the dispute in respect of availment of Cenvat credit on insuran....
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.... Insurance Health Policy taken by the assessee is a service which would constitute an activity relating to business which is specifically included in the input service definition. 4.3 Learned AR argued that apart from insurance the employees are also availing the medical allowances and therefore medical insurance risk coverage is nothing but welfare of the employees. 4.4 We have considered the rival submissions. Learned Counsel has argued that the insurance is strictly in terms of Section 38 of ESI Act. In terms of the decision of Hon'ble Karnataka High Court (supra), so long as the insurance is in terms of Section 38 of ESI Act the credit of the service tax paid is allowed. The appeal on this count is allowed." 8.3 I further find that the Hon'ble High Court of Karnataka has held the insurance service as admissible for availing the Cenvat credit as input services. The relevant paragraphs of judgement in the case of Commissioner of C. Ex. & Service Tax, LTU, Bangalore Vs. Micro Labs Ltd. - 2011 (270) E.L.T. 156 (Kar.) is extracted and given below: "This appeal is by the Revenue being aggrieved by the order of the Tribunal which held that the assessees are liable to avail ....
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....the employees. The employee State Insurance Act takes care of the health of the employees also and casts an obligation on the employer to provide insurance services. Under these circumstances, this Group Insurance Health Policy though is also a welfare measure is an obligation which is cast under the Statute that the employer has to obey. Section 38 of the Employees State Insurance Act, 1948, mandates that subject to the provisions of the Act, all employees in factories or establishments to which this Act applies shall be insured in the manner provided by this Act. May be the employees also have to contribute but the employer is under an obligation to take an Insurance policy and contribute his share. Therefore, the said Group Insurance Health Policy taken by the assessee is a service which would constitute an activity relating to business which is specifically included in the input service definition. 4. Therefore, merely because these services are not expressly mentioned in the definition of input service it cannot be said that they do not constitute input service and the assessees are not entitled to the benefit of CENVAT credit. Infact, Rule 3 of the Cenvat Rules, 2004, spec....