2012 (8) TMI 834 - AT - Central Excise

CENVAT Credit - Whether the respondent was entitled, during the period of dispute, to CENVAT credit of the service tax paid on Group Health Insurance premium covered by the Group Health Insurance Policy by the respondent in respect of their employees - Held that - In so far as Insurance coverage to the employees is concerned in the course of employment if the employees suffer injury or dies, there is a vicarious liability imposed on the employer to compensate the employee. If the employer employs its own transportation facility in order to cover the risk which also includes the risk of workers who are covered in that statutory establishment. He has to take the insurance policy without which the vehicle cannot go on the road. Under the Workmen s Compensation Act he has to obtain the Insurance Policy covering the risk of the employees. The employees State Insurance Act takes care of the health of the employees also and casts an obligation on the employer to provide insurance services. Under these circumstances, this Group Insurance Health Policy though is also a welfare measure is an obligation which is cast under the Statute that the employer has to obey. Section 38 of the Employees State Insurance Act, 1948, mandates that subject to the provisions of the Act, all employees in factories or establishments to which this Act applies shall be insured in the manner provided by this Act. May be the employees also have to contribute but the employer is under an obligation to take an insurance policy and contribute 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 - Following decision of Commissioner of Central Excise Bangalore-111 vs. Stanzen Toyotetsu India (P) Ltd. 2011 (4) TMI 201 - KARNATAKA HIGH COURT - Decided against Revenue.

Summary

Issues:
- Entitlement to CENVAT credit for service tax paid on Group Health Insurance premium.

Analysis:
The judgment by the Appellate Tribunal CESTAT Bangalore, delivered by Mr. P.G. Chacko, addressed the issue of whether the respondent was entitled to CENVAT credit for the service tax paid on Group Health Insurance premium. The Tribunal found that the substantive issue was covered in favor of the respondent by a previous decision in the case of Commissioner of Central Excise Bangalore-111 vs. Stanzen Toyotetsu India (P) Ltd. The key question revolved around whether the Group Insurance Health Policy, taken by the assessee for their employees, qualified as an input service under rule 2(l) of the CENVAT Credit Rules 2004.

The judgment referred to the decision of the Hon'ble High Court, which highlighted the statutory obligations imposed on the employer regarding insurance coverage for employees. The Court emphasized that under various Acts such as the Workmen's Compensation Act and the Employees State Insurance Act, there exists a vicarious liability on the employer to provide insurance services for the employees. The Group Insurance Health Policy was considered not just a welfare measure but an obligation mandated by statutes. The Court specifically mentioned Section 38 of the Employees State Insurance Act, which requires all employees in applicable establishments to be insured as per the Act's provisions.

Based on the above analysis and legal interpretation, the Tribunal dismissed the appeal, affirming the entitlement of the respondent to claim CENVAT credit for the service tax paid on the Group Health Insurance premium. The judgment was pronounced and dictated in open court, providing a clear resolution to the issue at hand.