TaxTMI 
TaxTMI 
2026 (8) TMI 1503
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....ssued by motor vehicle dealers that described services which they had never provided. 2.1. The DGCEI Officers visited the appellant's office premises at Kolkata and Chennai and recovered certain documents/records. Under summon proceedings, statements from various officials of the appellant-company were recorded. 2.2. From the investigation conducted, it was alleged that the appellant had issued motor insurance policies to vehicle purchasers through authorized car dealers. It was noticed that the dealers of such cars and two-wheelers sold such vehicles to customers at on-road prices, which included the damage insurance premium. The authorized dealers collected premia from the customers and after that, they accessed the appellant's network portal, tie-up partner's portal or the NICL portal and handed over the policies to the purchasers. The dealers then remit the damage insurance premium to the insurance company by cheque. The insurance company paid a specified percentage of OD premium as "payout" to the dealers based on invoices issued by the dealers. 3. Thereafter, a Show Cause Notice dated 07.10.2015 was issued alleging that the appellant was engaged in availment of ineli....
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....I Lombard General Insurance Co. Ltd. Vs. Commissioner of CGST & Central Excise [2023 (2) TMI 1093-CESTAT Mumbai] (vi) Oriental Insurance Company Ltd. V. Principal Commissioner of CGST, Delhi North [2026 (6) TMI 583 - CESTAT NEW DELHI] (vii) Royal Sundaram General Insurance Co. Ltd. Vs. Commissioner of Central Excise & Service Tax [(2025) 28 Centax 305 (Mad)] 4.2. In view of the above submissions, the Ld. Counsel for the appellant prayed that the impugned order be set aside. 5. On the other hand, the Ld. Special Counsel appeared on behalf of the Respondent and supported the impugned order. 6. Heard the parties. 7. The facts which are not in dispute are that in this case, the car/automobile dealers were issuing insurance policies on behalf of the appellant, to their customers, and insurance premium for the above policies was being collected by them from such purchasers, to be handed over to the appellant. For that activity, the appellant was paying some amount as 'payout' to the said dealers, on which the dealers are paying Service Tax, which was included by the dealers in the invoices raised on the appellant. The said amount of Service Tax paid has been....
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....he cascading effect, meaning thereby that the element of excise duty or service tax paid on the goods/services, should be available to the intermediary manufacturer of final products or provider of output services as Cenvat credit, so that the ultimate consumer will not be hard hit by paying more money for the goods or services. In this case, it is an admitted fact on record that the automobile dealers are registered with the service tax department for providing the taxable services and that the disputed service tax amount was paid by them into the government exchequer. When that is the admitted position, then denial of the benefit of such tax amount as cenvat credit to the appellants as the recipient of such service, cannot be questioned by the jurisdictional service tax authorities. 7. Further, in this case, the impugned order has invoked the provisions of Rule 14 of the Cenvat Credit Rules, 2004 for effecting recovery of the Cenvat credit availed by the appellants. The provisions for recovery of the wrongly availed and utilisation of Cenvat credit are contained in Rule 14 ibid. It has been provided under the statute that where the Cenvat credit has been taken and utilis....
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.... Tribunal, whether the Tribunal can go into the question as to whether the said service provider had provided service to the appellant or not, more so when the said service provider has been assessed to service tax under Business Support Service for the service rendered by them to the appellant. b) Is the Tribunal not in error in refusing credit to the appellant for service tax paid by them to service provider when payment of service tax by the appellant for the service rendered by service provider is not in dispute and that it is settled, the assessment to tax at the hands of the service provider end cannot be questioned in the hand of service receiver (appellant in this case)" 9.2 On proper analysis of the background of the matter involved in such decided case, the Hon'ble Court has answered to the above framed questions, by recording the following observations: "11. The short question, which falls for consideration, is whether the department as well as Tribunal could have held what was availed by the assessees as credit is only a reimbursement and it is an attempt of BIL to pass costs incurred by them towards MPLS. 12. Mrs. Aparna Nandakum....
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.... and until, the assessment on BIL had been reopened, the nature of transaction as referred by BIL has to be held to be wrong and the Commissioner (Appeals) could not have given a different interpretation to the nature of claim made by the BIL from the assessees by interpreting the terminalogy used in the invoice. The correct test, which ought to have been applied by the Adjudicating Authority, Appellate Authority and the Tribunal, is as to what is the character of payment made by the assessees on which they have availed the CENVAT credit. 16. In the instant cases, it is not in dispute that whatever the portion of Service Tax component which was collected from the assessees by BIL was only the amount on which the CENVAT credit has been claimed by the assessees. Therefore, unless and until the assessment made on BIL was revised, which obviously could have been done, at this juncture, on account of the expiry of the period of limitation, the interpretation given by the Commissioner (Appeals) as well as the Tribunal with regard to the nature of invoice raised on the assesses is unsustainable. Furthermore, we find that the reason assigned by the Tribunal in paragraph 6.2 statin....
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.... by the appellant, availment of such credit is in conformity with the Cenvat statute. We find that in an identical case, Cenvat credit was denied by the Department, holding that the invoices issued by the automotive dealers are false/fraudulent/invalid, since no service of the description contained therein was rendered by the auto dealer. The dispute was resolved by the co-ordinate Bench of the Tribunal in the case of M/s. Cholamandalam Ms General Insurance Co. Ltd. (supra), holding that since the service tax was paid by the auto dealer, under the taxable head of "Business Auxiliary Service and the assessment of auto dealer has not been re-opened or questioned, credit availed cannot be denied to the insurance company. This is also the ratio of the judgment of the Hon'ble Supreme Court in the case of MDS Switchgear Ltd. (supra), wherein it was held that once the tax liability has been discharged and accepted by the Department, the consequential Cenvat credit cannot be denied at the recipient's end. 6. The learned Original Authority has held that no commission could have been paid by the appellant to the automotive dealer under Section 40 of the Insurance Act, 1938 a....