2017 (8) TMI 1178 - AT - Service Tax

CENVAT credit - mediclaim policy of employees - Keyman Insurance Policy taken for the Managing Director of the appellant company - Held that - mediclaim policy has been taken for the period 2010-2011 involving ₹ 2,53,163/- as per the statement of the appellant, and the issue is covered by Hon ble Karnataka High Court decision in the case of CST, Bangalore Vs. M/s Team Lease Services Pvt. Ltd. 2014 (4) TMI 948 - KARNATAKA HIGH COURT , where it was held that 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 - credit allowed. Keyman Insurance Policy - Revenue pleads that there is clear cut finding in the impugned order that subject policy taken is not keyman policy which is evident from the cover note of the policy and no where indication is there that subject policy is a Keyman Insurance Policy - Held that - When the fact of subject policy is disputed, the matter is required to be sent back for fresh examination and adjudication by the original adjudicating authority, who shall decide the subject matter after giving opportunity of personal hearing and submission of documents to the appellant. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Denial of Cenvat credit for service tax paid on mediclaim policy for employees.
2. Denial of Cenvat credit for service tax paid on Keyman Insurance Policy for Managing Director.

Analysis:

Issue 1: Denial of Cenvat credit for mediclaim policy:
The appellant appealed against the denial of Cenvat credit for the service tax paid on the mediclaim policy for employees. The Hon'ble Karnataka High Court decision in the case of CST, Bangalore Vs. M/s Team Lease Services Pvt. Ltd. was cited, which emphasized the employer's obligation to provide insurance services under various statutes. The court held that the Group Insurance Health Policy taken by the appellant constitutes an activity relating to business and is covered under the input service definition. Consequently, the appellant was deemed entitled to the benefit of Cenvat credit for the mediclaim policy of employees for the relevant period.

Issue 2: Denial of Cenvat credit for Keyman Insurance Policy:
Another issue revolved around the denial of Cenvat credit for the service tax paid on the Keyman Insurance Policy taken for the Managing Director. The appellant contended that a similar CESTAT decision allowed Cenvat credit for a Keyman Insurance policy, which they equated to a life insurance policy for a key person. However, the Revenue argued that the impugned policy was not explicitly identified as a Keyman Insurance Policy in the cover note. As the nature of the policy was disputed, the matter was deemed to require fresh examination and adjudication by the original authority, providing the appellant with an opportunity for personal hearing and document submission.

In conclusion, the judgment set aside the impugned order and allowed the appeal by remanding the case for further examination regarding the claim of Cenvat credit for the Keyman Insurance Policy.