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2019 (5) TMI 237 - AT - Service TaxCENVAT Credit - input services - insurance policy called Nagrik Suraksha Policy - period 10/2014 to 03/2016 and 04/2016 to 06/2017 - HELD THAT - From 1.4.2011, the definition of input service was amended to exclude certain services which also includes life insurance and health insurance services which are used primarily for personal use or consumption of an employee by exclusion Clause (c). The Commissioner (A) has relied upon the decision of the Tribunal in the case of APPLIED MICRO CIRCUITS INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-III 2016 (2) TMI 336 - CESTAT MUMBAI and has held that after amendment of Rule 2(l) and in view of the specific exclusion with respect to life insurance service and outdoor catering, credit is not available. The period involved in the present case pertains to October 2014 to June 2017 when these services were specifically excluded from the definition of input service - credit cannot be allowed - appeal dismissed - decided against appellant.
Issues:
Appeal against rejection of appeals by Commissioner (A) regarding CENVAT credit on insurance policy premium amount for manpower recruitment services. Analysis: 1. Identification of Common Issue: The appellant filed two appeals against the common impugned order passed by the Commissioner (A) rejecting their appeals. The issue in both appeals is identical, involving the denial of CENVAT credit on insurance premium amounts for providing Manpower Recruitment and Supply Agency services. 2. Facts and Allegations: The appellant, registered with the service tax department, employed skilled but illiterate laborers on a monthly salary basis. The Department alleged irregularity in claiming CENVAT credit on service tax paid by insurance companies for Nagrik Suraksha Policy. Show-cause notices were issued covering the periods from October 2014 to June 2017. The demands were confirmed by the Superintendent of Central Excise, leading to the appellant's appeals to the Commissioner (A). 3. Appellant's Arguments: The appellant contended that the insurance policy was taken to cover compensation for work-related accidents, not for personal consumption. They argued that the policy aimed to meet the requirements of the Workmen's Compensation Act, providing financial protection in case of accidents affecting employees. The appellant cited relevant legal decisions to support their position. 4. Respondent's Defense: The Respondent defended the denial of credit, stating that life insurance services were excluded from the definition of input services for personal consumption of employees. They argued that the Nagrik Suraksha Policy was not mandatory but a voluntary welfare measure by the company, and its coverage outside the workplace was unclear. 5. Legal Interpretation: The Tribunal analyzed the amended definition of 'input service' from April 1, 2011, which excluded life insurance and health insurance services primarily used for personal consumption of employees. Relying on precedent cases, the Tribunal upheld the denial of CENVAT credit on insurance services, emphasizing the legislative intent behind the exclusion clause. 6. Precedent Cases and Tribunal Decisions: The Tribunal referenced past cases like Applied Micro Circuits India Ltd. and S.K.D. Lakshmanan Fireworks Industries to support its decision. These cases highlighted that services like life insurance were explicitly excluded from CENVAT credit eligibility when primarily used for personal employee benefits. 7. Decision and Rationale: Considering the legislative intent and precedents, the Tribunal upheld the Commissioner (A)'s decision to reject the appeals. The Tribunal found no merit in the appellant's arguments and dismissed both appeals, affirming the denial of CENVAT credit on insurance services. In conclusion, the Tribunal's judgment focused on the exclusion of life insurance services from CENVAT credit eligibility, emphasizing the legislative amendments and precedent cases to support its decision.
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