2018 (9) TMI 1585 - AT - Service Tax

CENVAT credit - input services - repairs and maintenance of the vehicles by the Authorized Service Stations in respect of those vehicles which were insured by the appellant - Held that - The issue has been considered by this very Bench in this very assessee s case in M/s. United India Insurance Co. Ltd. Vs. C.C.E. & S.T., LTU, Chennai 2018 (6) TMI 200 - CESTAT CHENNAI , where it was held that the service tax paid on the bill of the ASS is to be considered as falling within the definition of the input service which is used for providing the output service of the vehicle insurance - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
Challenge to Order-in-Appeal No. 35/2011 dated 30.08.2011 regarding CENVAT credit for service tax paid on repairs and maintenance of vehicles by Authorized Service Stations (ASS) for insured vehicles.

Analysis:
The appellant, engaged in 'General Insurance' business, availed CENVAT credit for service tax paid on repairs and maintenance of insured vehicles by ASS during 2008-09. The Department contended that such services did not qualify as input services under Rule 2(l) of the CCR, 2004. Consequently, a demand of ?3,02,19,114/- along with interest and penalties was confirmed by the adjudicating authority. The appeal against this demand was allowed by the Commissioner (Appeals), leading to the Revenue's appeal before the CESTAT Chennai.

During the hearing, the advocate for the assessee argued that the issue had already been settled by the Bench in the assessee's previous case. The Revenue's representative agreed that the issue was identical to the one previously decided by the Bench. Referring to the decision in M/s. United India Insurance Co. Ltd. Vs. C.C.E. & S.T., LTU, Chennai, the Bench reiterated that the service tax paid on repairs by ASS for insured vehicles falls within the definition of input service used for providing vehicle insurance services.

The Bench further discussed the distinction between the beneficiary and recipient of services, emphasizing that the appellant becomes the recipient of services from ASS even though the vehicle owner is the beneficiary. Referring to a TRU Circular, the Bench highlighted that as the service receiver, the appellant was entitled to CENVAT credit. Despite invoices being in favor of vehicle owners, the Bench deemed this a procedural infraction and allowed the credit as the appellant reimbursed repair costs and processed insurance claims based on proper surveys.

Based on the above reasoning and precedent, the appeal of the Revenue was dismissed, setting aside the impugned order and allowing the appeal of the assessee.