2015 (12) TMI 675 - AT - Service Tax

Denial of CENVAT Credit - health insurance service - Nexus with input service - Held that - There is no dispute about the fact that insurance service was availed by the assessee in March 2011, the consideration of the same was paid by the assessee in March 2011 itself and the credit was taken in March 2011. As such, the amended provisions, which were applicable from 1-4-2011 would not be applicable to the activities which have been completed prior to the said date. - there is no dispute about the fact that insurance service was availed by the assessee in March 2011, the consideration of the same was paid by the assessee in March 2011 itself and the credit was taken in March 2011. As such, the amended provisions, which were applicable from 1-4-2011 would not be applicable to the activities which have been completed prior to the said date. - Decided against Revenue.

Summary

Issues:
1. Availing credit for insurance service under Cenvat Credit Rules.
2. Applicability of amended provisions to insurance services availed before the effective date.
3. Interpretation of Point of Taxation Rules in relation to service completion date.

Issue 1: Availing credit for insurance service under Cenvat Credit Rules
The case involved the respondents availing health insurance service in March 2011, paying for it in the same month, and claiming credit for it within the same period. The Revenue contended that the credit availed did not comply with the amended provisions of Cenvat Credit Rules, which excluded insurance services from the definition of input service effective from 1-4-2011.

Issue 2: Applicability of amended provisions to insurance services availed before the effective date
The proceedings initiated against the respondents resulted in the denial of credit by the Revenue, leading to an appeal. The Commissioner (A) considered the Taxation Rules and the Point of Taxation definition, concluding that since the service was completed before 1-4-2011, the respondents were entitled to the credit for the service tax paid.

Issue 3: Interpretation of Point of Taxation Rules in relation to service completion date
In the judgment, it was noted that there was no dispute that the insurance service was availed, paid for, and credit taken in March 2011. The Tribunal held that the amended provisions effective from 1-4-2011 would not apply to activities completed before that date. The reference to the Point of Taxation Rules by the Commissioner (A) was deemed appropriate, as the service was provided and formalities completed in March 2011, aligning with the definition of Point of Taxation.

The Tribunal rejected the Revenue's appeal, upholding the Commissioner (A)'s decision based on the completion date of the service in relation to the Point of Taxation Rules. The judgment emphasized that activities finalized before the effective date of amended provisions would not be subject to those changes, ensuring the respondents' entitlement to the credit for the insurance service availed in March 2011.