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2013 (1) TMI 117 - AT - Service TaxDenial of CENVAT credit on insurance service - Held that - As decided CCE, Bangalore-III Vs. Stanzen Toyotetsu India (P) Ltd. 2011 (4) TMI 201 - KARNATAKA HIGH COURT having regard to the provisions of the Employees State Insurance Act, 1948 and the Workmens Compensation Act the insurance policy taken by the assessee was a service constituting activity relating to business and hence an input service under Rule 2(l) of the CENVAT Credit Rules, 2004 for the purpose of CENVAT credit. As the Hon ble High Court s judgment was accepted by the Department assessee s appeal is allowed in this case.
Issues involved: Appeal for waiver and stay of adjudged dues regarding demand of service tax based on denial of CENVAT credit on insurance service.
Analysis: 1. The appeal was filed seeking waiver and stay of the adjudged dues related to a demand of service tax amounting to over Rs.74.7 lakhs for the period from April 2007 to September 2010, arising from the denial of CENVAT credit on insurance service. The appellant, a Manpower Recruitment or Supply Agency Service, had obtained insurance coverage for recruited personnel. The impugned demand was based on the total insurance premium paid by the appellant for the relevant period. 2. The Hon'ble High Court of Karnataka in the case of CCE, Bangalore-III Vs. Stanzen Toyotetsu India (P) Ltd. [2011(23) STR 444 (Kar.)] had considered a similar issue. The court held that the insurance policy taken by the assessee was a service constituting activity relating to business and thus an input service under Rule 2(l) of the CENVAT Credit Rules, 2004. The judgment was accepted by the Department, establishing a precedent in this regard. 3. Considering the precedent set by the High Court judgment, the Appellate Tribunal set aside the impugned order and allowed the appeal. The substantive issue was already covered by the High Court's decision, leading to the disposal of the stay application as well. 4. In conclusion, the appeal was disposed of in favor of the appellant based on the precedent established by the High Court judgment, which recognized the insurance service as an input service eligible for CENVAT credit. The Appellate Tribunal's decision aligned with the legal interpretation provided by the High Court, resulting in the waiver and stay of the adjudged dues in this case.
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