2017 (7) TMI 720 - AT - Service Tax

CENVAT credit - input services - Insurance Services for workers at site - Held that - The exclusion clearly mentions various services including the Life Insurance and Health Insurance Services as not covered by Input Services. Similarly, the travel benefits extended to the employees at the time of Leave or Home Travel Concession also stands excluded. There is no warrant to read excluded Health Insurance Services with the travel benefits for leave etc - the fact that the appellant is obliged to provide such services under the Employees State Insurance Act, 1948 can also not to be held as ground to allow the credit, in as much as legislation is within its right to amend the definition of Input Services and to include or exclude any of the services from its ambit. In any case, the Tribunal is not within its jurisdiction to decide on the vires of the said amendments - demand upheld. Penalty - Held that - the appellants have availed the credit while reflecting the same in their account books as also in the various returns filed with the Revenue. Further, the issue involved is also a bonafide legal issue of interpretation of the provisions of law and cannot be held to be a malafide. In such a scenario, the imposition of penalty upon assessee is not warranted. Appeal dismissed - decided against assessee only except with regard to penalty, which is set aside.

Summary

Issues:
1. Availment of Cenvat credit on insurance services post-amendment.
2. Interpretation of exclusion clause in the definition of "Input Services" post-amendment.
3. Obligation under the Employees State Insurance Act, 1948 vs. admissibility of credit.
4. Imposition of penalty for availing credit.

Analysis:
1. The appellant availed credit for insurance premium paid for workers, post-amendment excluding insurance services from "Input Services." Revenue objected, leading to proceedings and denial of credit with penalty imposition.
2. Appellant argued insurance was mandatory under Employees' State Insurance Act, 1948, directly linked to output service, citing precedent. Revenue highlighted the clear exclusion clause post-amendment, differing from the precedent's interpretation.
3. Tribunal analyzed if insurance services remained covered post-amendment, citing exclusion clause specifying life and health insurance. Disagreed with appellant's interpretation, emphasizing the exclusion's clarity and non-requirement for further linkage.
4. Tribunal upheld credit inadmissibility post-amendment, dismissing the obligation under Employees State Insurance Act as insufficient grounds. Penalty imposition was set aside due to the bona fide nature of the legal interpretation issue.

This judgment clarifies the post-amendment scenario regarding insurance services' credit availment under the "Input Services" definition. It underscores the exclusion's unambiguous language and the tribunal's role in interpreting legislative changes. The obligation under a separate act does not override the specific exclusion clause. The penalty was waived due to the genuine legal interpretation dispute.