TaxTMI 
TaxTMI 
2025 (10) TMI 1192
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....refore, referred the following issue to be decided by a larger bench of the Tribunal: "Whether in the case of service provider, the service provider is entitled to avail credit on group insurance service in terms of Rule 2(l) of Cenvat Credit Rules, 2004 or not?" 2. The division bench expressed doubts on whether refund of service tax paid on group insurance services (medical) could be granted. It needs to be noted that the Commissioner (Appeals) had granted credit of group insurance services (medical) after placing reliance on the judgment of the Karnataka High Court in Commissioner of C. Ex., Bangalore-III vs. Stanzen Toyotetsu India (P) Ltd. [2011 (23) S.T.R. 444 (Karnataka)] and the decision of the Tribunal in Hindustan Coca Cola Beverages P. Ltd. vs. Commissioner of Central Excise, Hyderabad [2010 (19) S.T.R. 93 (Tri.-Bang.)]. 3. In the opinion of the division bench, the aforesaid decisions would not be applicable as they pertain to manufacture of goods and not to provider of service. The reason for referring the issue to a larger bench of the Tribunal in the order dated 06.02.2019 passed by the division bench of the Tribunal is contained in paragraph 8 of the or....
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.... refund of Rs. 1,81,98,576/- was granted to HCL, but the claim of refund in respect of Rs. 54,84,068/- was not granted. 7. Feeling aggrieved, the appellant filed an appeal before the Commissioner (Appeals), who by an order dated 29.02.2012, granted further refund in respect of "insurance auxiliary service", "advertisement service" and in respect of SEZ unit. 8. The department has filed this appeal in respect of grant of refund pertaining to service tax paid on "insurance auxiliary service" and in respect of services provided to SEZ unit. 9. The division bench, while hearing this appeal, held that HCL was entitled to avail credit in respect of SEZ unit but, as noticed above, expressed doubts as to whether HCL could avail credit of service tax paid on group insurance services (medical). 10. To examine the contentions that have been advanced by Ms. Chitra Shirvastava, learned authorized representative appearing for the department and Ms. Shagun Arora and Shri Kunal Aggarwal, learned counsel for HCL, it would be appropriate to first refer to the relevant provisions of the 2004 Credit Rules. 11. During the period from October, 2010 to December, 2010, rule 2(l) of the 2004....
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.... be an input service. Learned authorized representative further submitted that this service is provided to an individual for personal use and does not have any adverse impact on the output service. The contention of the learned authorized representative, therefore, is that this service has no nexus with the output service. According to the learned authorized representative, the judgment of the Karnataka High Court in Stanzen Toyotetsu would not be applicable as the said judgment is based on section 38 of the Employee State Insurance Act, 1948 which makes it mandatory for all employees to be insured. Hindustan Coca Cola Beverages, on which reliance was also placed by the Commissioner (Appeals), would also not be applicable as the assessee was a manufacturer of excisable goods and not a service provider but the present assessee is exclusively a service provider and is not engaged in the manufacture of excisable goods. Learned authorized representative placed reliance upon a judgment of the Supreme Court in Maruti Suzuki India Ltd. vs. Commissioner of Central Excise, Delhi-III [2009 (240) E.L.T. 641 (SC)]. 15. Learned counsel for HCL, however, submitted that group insurance service....
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....ovides that input service means any service used by a provider of taxable service for providing an output service. The "includes" part, amongst others, also refers to "activities relating to business". 19. Rule 3 of the 2004 Credit Rules provides that a provider of output service shall be allowed to take CENVAT credit of the service tax leviable under section 66 of the Finance Act, 1994 paid on any input service received by the provider of output service. 20. A perusal of the rule 3 indicates that CENVAT credit would be available to a provider of output service if the following conditions are satisfied: (i) The recipient of service is a provider of output service; (ii) The service received qualifies as an input service; (iii) Such input service should be used in providing the output service; and (iv) Service tax has been paid on the input service. 21. In the present case, it is not in dispute that the group insurance services (medical) services have been received by HCL, which is an output service provider; the group insurance services (medical) have been used by HCL; and that service tax has been paid by HCL on such services. The only d....
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....or HCL is, therefore, justified in submitting that group insurance services (medical) would also fall in the "inclusive" part of the definition of input service, as it would be an activity relating to business. 27. A division bench of the Tribunal in the matter of HCL itself in HCL Technologies examined this issue and in respect of group insurance services (medical) held that it would qualify as an input service in view of the decision of the Tribunal in Hindustan Coca Cola Beverages. 28. This decision of the Tribunal in HCL Technologies was assailed by the department before the Allahabad High Court. The Allahabad High Court held that this service would fulfill the description of the expression "input service". The relevant portion of the judgment of the Allahabad High Court is reproduced below: "5. Insofar as the [Medical] Group Insurance is concerned, this is governed by two decisions of the Karnataka High Court in Commr. of C. Ex., Bangalore v. Stanzen Toyotetsu India (P) Ltd. - 2011 (23) S.T.R. 444 (Kar.) and in Commissioner of C. Ex., Bangalore v. Millipore India Pvt. Ltd. - 2012 (26) S.T.R. 514 (Kar.). The service has been held to fulfill the description of the....
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....ibute 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. 15. 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 assessee is not entitled to the benefit of CENVAT credit. In fact, Rule 3 of the Cenvat [Credit] Rules, 2004, specifically provides that the manufacturer of final products shall be allowed to take credit, the service tax leviable under Section 66 of the Finance Act and paid on any input service received by the manufacturer of a final product. Therefore under the scheme of the Cenvat Credit Rules, 2004, the service tax paid on all those services which the assessee has utilized directly 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. Hence, the substantial questions of law framed in....
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.... "... In other words, by applying the ratio laid down by the Apex Court in the case of Maruti Suzuki Ltd. (supra), it cannot be said that the definition of 'input service' is restricted to the services used in relation to the manufacture of final products, because the definition of 'input service' is wider than the definition of 'input'." (emphasis supplied)" (emphasis supplied) 34. In Axis Bank, on which reliance was placed by the larger bench, the Bombay High Court examined whether 'Group Insurance Health Policy' taken by an employer for the employees would be 'input service' as defined in rule 2(l) of the 2004 Credit Rules. The question that had been urged for consideration of the High Court by the Revenue was: "(a) Whether the Group Insurance Health Policy taken by the assessee for its employees, is an "input service" as defined under Rule 2(1) of the Cenvat Credit Rules, 2004 and the CESTAT was right in allowing the CENVAT Credit on the same?" 35. This question was answered by the Bombay High Court in the following manner: "4. Re Question (a) :- (i) Respondent-Assessee during period April, 2003 to March, 2011, took CENVAT Credit of ....
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....usive definition and what is contained in the definition is only illustrative in nature. Activities relating to business and any services rendered in connection therewith would, therefore, form part of "input services". Thus, medical benefits provided to employees, and the insurance policies taken by the employer to cover the risk would form part of input services. The relevant portion of the judgment of the Karnataka High Court is reproduced below: "7. That apart, the definition of input services is too broad. It is an inclusive definition. What is contained in the definition is only illustrative in nature. Activities relating to business and any services rendered in connection therewith, would form part of the input services. The medical benefit extended to the employees, insurance policy to cover the risk of accidents to the vehicle as well as the person, certainly would be a part of the salary paid to the employees. Landscaping of factory or garden certainly would fall within the concept of modernization, renovation, repair, etc., of the office premises. At any rate, the credit rating of an industry is depended upon how the factory is maintained inside and outside the ....
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....wed or re-assessed, the claim for refund of CENVAT credit could not have been denied by the respondents. When confronted with the application for refund, all that the respondents could have possibly examined or evaluated was whether the provisions of Rule 5 read along with the various prescriptions contained in the notification dated 18 June 2012 had been complied with. The respondents, at this stage of the proceedings, could not have doubted, questioned or undertaken a merit review of the self-assessed return which had been submitted. 68. The reliance which is placed on Clause 3(g) of the Notification dated 18 June 2012 also would not justify the denial of refund, since the expressions 'determine' and 'satisfy' as appearing in the parent Rule as also the Notification noted hereinabove would have to be construed bearing in mind the limited jurisdiction and authority which was available in the hands of the Adjudicating Authority and exercised by it while considering the application for refund. In any case, the mere usage of the expressions 'determine' or 'satisfy' would, in our considered opinion, not amount to expanding the nature of the authority which the second responde....