2013 (2) TMI 132 - AT - Service Tax

Waiver of pre-deposit - Circular F.No.334/1/2010-TRU dated 26.2.2010 - Assessee is an insurance Company, provides insurance on motor vehicles - applicants are paying service tax on insurance premium - Denial of CENVAT credit paid on repair service of vehicles done by the authorized service station on behalf of the insurance company under the cashless scheme Revenue argued that the service tax component on account of repair charges/ services is not entitled to them for input service credit as the repair service of the vehicle was availed by the vehicle owners as the invoices are in the name of the vehicle owners Held that - Such situation as clarified by CBEC, in their Circular F.No.334/1/2010-TRU dated 26.2.2010 wherein it is clarified the insurance company is the service receiver. Therefore, on the basis of the above cited Circular, prima facie, the applicant are entitled to take input service credit on the impugned services - the applicant has made out a case for 100% waiver of predeposit.

Summary

Issues involved: Denial of input service credit to the applicant on the grounds of not being the actual service receiver.

Analysis:
The appellant, an Insurance Company providing insurance on motor vehicles, was denied input service credit amounting to Rs.1,96,64,604 on the basis that they were not the actual service receiver. The dispute arose from the repair services provided under a cashless scheme where damaged vehicles were sent to authorized service stations for repair at the expense of the appellant, including service tax. The Revenue contended that since the repair services were availed by the vehicle owners and the invoices were in their names, the appellant was not entitled to claim input service credit.

Upon hearing both sides, it was acknowledged that the repair services for vehicles were carried out by authorized service stations on behalf of the appellant as per the insurance cover provided under the cashless scheme. Referring to a Circular by CBEC dated 26.2.2010, which clarified that the insurance company is considered the service receiver in such situations, the Tribunal found that the appellant was indeed entitled to claim input service credit on the services paid by them. Consequently, the Tribunal granted a 100% waiver of predeposit and stayed the recovery of the service tax, interest, and penalties during the pendency of the appeal.