2017 (3) TMI 874 - AT - Service Tax

CENVAT credit - insurance service - real agent service - event management services - denial on the ground that these expenses are for personal benefit of the employees and not in relation to the business in any way - Held that - the assessee-appellant had taken group medical claim policy for the employees and availed CENVAT credit of service tax paid for such insurance company - CENVAT credit cannot be rejected on the Group Insurance Health Policy taken by the employer - credit allowed. Real estate agent services - Held that - these services are contracted by appellant in order to scout and procure residential accommodation for a particular class of their employees to whom they are obligated to give free accommodation due to the posts held by them - CENVAT credit of service tax paid on the services of real estate agent who help in finding residential accommodation for their employees is permitted - credit allowed. Event management services - Held that - the services which are received by assessee-appellant as per the invoices produced before the lower authorities and before us, we find that these events are organized by assessee-appellant in order to attract more business from high network customers. The events organized are offering tickets of film shows to the said customers or organizing get to-gather to attract more capital from these high network clients - the CENVAT credit taken/availed by assessee-appellant of service tax paid for even management services cannot be denied. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of CENVAT credit on service tax paid by service providers on insurance, real estate agent services, and event management services.
- Imposition of penalties on the assessee-appellant.

Analysis:
1. Denial of CENVAT Credit on Insurance Services:
The appellant, a bank, contested the denial of CENVAT credit on service tax paid by the insurance company for group medical claim policies for employees. The Tribunal noted that the denial was based on the premise that these expenses were for personal benefit and not related to business. However, citing precedents like Stanzen Toyotetsu India (P) Ltd. and Micro Labs Ltd., the Tribunal held that such CENVAT credit cannot be rejected, as confirmed by the High Court of Karnataka. Therefore, the denial of CENVAT credit on insurance services was deemed incorrect.

2. CENVAT Credit on Real Estate Agent Services:
Regarding the CENVAT credit on real estate agent services for procuring residential accommodation for employees, the Tribunal found that the services were essential for providing free accommodation to specific employees. Relying on previous decisions like Gateway Terminals (I) Pvt. Ltd. and Toyota Kirloskar Motors P. Ltd., the Tribunal affirmed that the appellant was eligible to avail CENVAT credit on such services. The denial of CENVAT credit on real estate agent services was deemed incorrect.

3. CENVAT Credit on Event Management Services:
The Tribunal examined the CENVAT credit on event management services utilized by the appellant for business promotion activities. It was established that these services were integral to attracting high net-worth clients and promoting business growth. Referring to cases like Oceans Connect India Pvt. Ltd. and John Deeree India Pvt. Ltd., the Tribunal concluded that the appellant was justified in availing CENVAT credit on event management services. The denial of CENVAT credit on event management services was deemed incorrect.

4. Imposition of Penalties:
The Revenue appealed against the absence of penalties imposed on the appellant. However, since the Tribunal ruled in favor of the appellant regarding the eligibility to avail CENVAT credit, the Revenue's appeal for penalties was rendered irrelevant and rejected. The appeals filed by the appellant were allowed, while those filed by the Revenue were rejected.

In conclusion, the Tribunal set aside the impugned order, allowing the appeals of the assessee-appellant. The judgment emphasized the eligibility of the appellant to avail CENVAT credit on insurance, real estate agent, and event management services, based on established legal precedents and the nature of business activities conducted by the appellant.