2011 (6) TMI 115 - HC - Service Tax

Cenvat credit - Scrutiny - Group Mediclaim Policy premium - rule 3 of the Cenvat Credit Rules, 2004 - Group Insurance Health Policy taken of the assessee is a service which would constitute an activity relating to business which is specifically included in the input service definition - 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 - Therefore under the scheme of the Cenvat Credit Rules, 2004, the service fax 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 - Decided in favour of the assessee

Summary

Issues:
Whether assessees can avail Cenvat credit for service tax paid on Group Medicieim Policy premium.

Analysis:
The appeal was filed by the revenue challenging the Tribunal's decision allowing assessees to avail Cenvat credit for service tax paid on Group Medicieim Policy premium. The assessees, engaged in manufacturing medicaments, had availed Cenvat credit for the premium payment, leading to a show-cause notice for recovery and penalties. The Commissioner and Tribunal upheld the demand, prompting the revenue's appeal. The Tribunal relied on a previous case to support the assessees' entitlement to the credit.

The main issue was whether assessees could claim Cenvat credit for service tax on Group Insurance Health policy. A previous Division Bench case addressed a similar question regarding Insurance/Health Insurance policy. The Division Bench ruled that such policies, including Group Insurance Health Policy, were obligatory under statutes like the Employees State Insurance Act, imposing vicarious liability on employers to provide insurance services. The policies were deemed as activities relating to business and fell under the input service definition.

The judgment emphasized that services like Group Insurance Health Policy, though not explicitly listed in the input service definition, still qualified for Cenvat credit. Rule 3 of the Cenvat Credit Rules, 2004, allowed manufacturers of final products to claim credit for service tax paid on input services used directly or indirectly in relation to the final product. The Tribunal's decision was deemed legal and in line with the law, warranting no interference.

Conclusively, the assessees were deemed entitled to avail Cenvat credit for service tax on Group Medical Policy and Group Insurance Health Policy. With the Division Bench's ruling on a similar matter, the appeal was dismissed based on the established legal principles and precedents discussed in the judgment.