2022 (2) TMI 545 - AT - Service Tax

CENVAT Credit - input services - Management or Business Consultancy Service - credit denied on the premise that the said services do not qualify as input service in terms of Rule 2(l) of Cenvat Credit Rules, 2004 - Professional indemnity insurance - Medical insurance policy - credit of inadmissible service against Bills of M/s Wizcraft for EOY Awards Expenses and Budget Day Programme Expenses - Credit against bills of Perfect Business Centre Services Pvt. Ltd. on cost of travel coupons in February, 2010 - Credit in respect of improper documents - Credit non levy amount against bills of M/s. Perfect Business Centre and M/s Ind Global Corporate Finance Ltd. For Renting of Immovable Service for the period April-May, 2007 - Invocation of extended period of limitation - penalty. Professional indemnity insurance - HELD THAT - The appellant is providing consulting service and availed professional indemnity insurance against the liability which may arise on account of any dispute arises for providing the services provided by the appellant. The said insurance helps and protect professional advice and service provided by the officials/individuals of the appellant from bearing the full cost of damages awarded in a civil suit to the service recipient. The appellant undertakes to indemnify their clients in respect of certain losses against future claim by their clients against the appellant. In that circumstance, the said service i.e. Professional Indemnity Insurance do qualify as an input service in terms of Rue 2(l) of Cenvat Credit Rules, 2004. Medical insurance policy - HELD THAT - From the facts of the case, it is coming out that the group insurance has been taken by the appellant not only for their employees but for their family members also. In that circumstances, the service tax paid on premium for group medical insurance paid toward the insurance of family members of the employees of the appellant, therefore, the appellant is not entitled to take credit on the service tax paid on the part of group medical insurance paid towards the family members of the employees of the appellant - it is not coming out how much amount of premium of group medical insurance policy belong to the employees of the appellant and how much amount to the family members of the employees of appellant. In that circumstance, the matter needs consideration at the end of the adjudicating authority to find out the inadmissible cenvat credit of service tax paid of medical insurance towards the family members of the employees of the appellant - The appellant is directed to provide data for the same. Credit of inadmissible service against Bills of M/s Wizcraft for EOY Awards Expenses and Budget Day Programme Expenses - HELD THAT -The said service is entitled for cenvet credit as input service. Further, an EOY award is an event where top industry leaders, professionals and entrepreneurs who have excelled in their respective fields are appreciated and recognized for their achievements. The event is attended by senior management personnel of the appellant which gives them an opportunity to develop new business relationships which are leveraged in future to generate business - said activity is also termed as service availed in relation to the business of the appellant, the same is entitled to cenvat credit as input service. C redit against bills of Perfect Business Centre Services Pvt. Ltd. on cost of travel coupons in February, 2010 - HELD THAT - There is bifurcation of the services availed by the appellant. The appellant has failed to provide data and information whether the said travel coupons has been used for business purpose or not? Failing which inference is drawn that the said coupons were used by the employees of the appellant for their personal use. Therefore, the service tax paid on travel coupons do not qualify as input service. Accordingly, on that service the appellant is not entitled to take credit and the same is denied. Credit in respect of improper documents - HELD THAT - The appellant is having various offices at various other locations, on those locations the appellant is availing the services of repairs, maintenance and renovation, etc. and all these locations have been used for proving output service by the appellant. In that circumstance, the appellant is entitled to avail credit on these services, therefore, the credit denied on account of improper documents is not sustainable - the appellant is entitled to take cenvet credit on the invoices issued by M/s. Woodcraft for maintenance, repairs and renovation ect, of the offices of the appellant. Credit of non levy amount against bills of M/s. Perfect Business Centre and M/s Ind Global Corporate Finance Ltd. For Renting of Immovable Service for the period April-May, 2007 - HELD THAT - Levy of service tax on renting of immovable property service came into force with effect from 1.6.2007 and the service tax on which cenvat credit availed is pertained to the period prior to that, as no service tax was payable by the service provider and there was no levy of service tax prior to 1.6.2007, the said service prior to 01.06.2007, cannot be held as input service to avail credit by the appellant. The appellant was not required to pay service tax for the April, 2007 and May, 2007 as there was no levy of service tax during the said period. In that circumstance, on merits, the appellant is not entitled to take credit of service tax paid on renting of immovable property for the period for the April, 2007 and May, 2007 - it is evident that the cenvet credit has been availed in the month of March, 2008 whereas the show cause notice has been issued on 18.04.2013 which beyond the extended period of limitation, in that circumstance, we hold that the show cause notice issued beyond 5 years of availment of cenvet credit to deny cenvet credit availed for the period of April-May, 2007 is barred by limitation and the same cannot be recovered. Extended period of limitation - HELD THAT - For the period 2007-08 to 31.3.2011, an audit took place during the period January, 2013, to February, 2013. If audit could not take place, the availment of inadmissible cenvat credit could not revealed, therefore, after analysing the case laws on the issue, we hold that the extended period of limitation is rightly invoked. Penalty - HELD THAT - In terms of the provisions of section 80 of the Finance Act, 1994 which provides for immunity from imposition of penalty, the provisions of Sec. 80 of the Finance Act, 1994 is invoked, immunity granted from imposition the penalty on the appellant. Therefore, the penalty imposed on the appellant is set aside. The matter remanded back to the adjudicating authority for computation of demand of amount of cenvet credit recoverable from the appellant - appeal allowed by way of remand.

Summary

Issues Involved:
1. Professional Indemnity Insurance (PII)
2. Group Mediclaim Insurance Policy
3. Expenses on EOY Awards and Budget Day Programme
4. Travel Coupons
5. Improper Documents
6. Non-levy Amount for Renting of Immovable Property Service
7. Extended Period of Limitation
8. Penalty

Issue-wise Detailed Analysis:

1. Professional Indemnity Insurance (PII):
The appellant argued that PII is essential for protecting against claims of negligence in providing consultancy services. The Tribunal agreed, stating that PII qualifies as an input service under Rule 2(l) of the Cenvat Credit Rules, 2004, as it has a direct nexus with the output services provided. The Tribunal referenced its previous decision in the appellant’s case, reinforcing the entitlement to credit on PII.

2. Group Mediclaim Insurance Policy:
The appellant claimed that providing mediclaim insurance to employees is a common business practice to ensure workforce efficiency. The Tribunal acknowledged that insurance for employees is covered under the definition of input service until 31.03.2011. However, since the policy also covered employees' family members, the Tribunal directed the adjudicating authority to determine the inadmissible credit portion related to family members and allowed credit only for the employees' portion.

3. Expenses on EOY Awards and Budget Day Programme:
The appellant contended that these events were linked to business activities, enhancing employee knowledge and fostering business relationships. The Tribunal agreed, recognizing the Budget Day programme as crucial for understanding Union Budget changes and the EOY awards as beneficial for business networking. Thus, credit on these services was allowed.

4. Travel Coupons:
The appellant argued that travel coupons were part of support services related to renting immovable property. The Tribunal found no evidence that the travel coupons were used for business purposes and inferred personal use by employees. Consequently, credit on travel coupons was denied.

5. Improper Documents:
The appellant claimed that invoices from M/s Woodcraft for office maintenance were addressed to registered premises. The Tribunal held that since the services were used for providing output services, credit should not be denied due to improper documentation. Therefore, the appellant was entitled to credit on these invoices.

6. Non-levy Amount for Renting of Immovable Property Service:
The Tribunal noted that service tax on renting immovable property became effective from 01.06.2007. Since the service tax for April and May 2007 was not legally leviable, credit for this period was inadmissible. However, the demand for recovery was barred by limitation as the show cause notice was issued beyond the extended period.

7. Extended Period of Limitation:
The Tribunal upheld the invocation of the extended period of limitation, noting that the irregularities were discovered during a special audit, indicating an intention to avail inadmissible credit.

8. Penalty:
Invoking Section 80 of the Finance Act, 1994, the Tribunal provided immunity from penalties, setting aside the penalty imposed on the appellant.

Conclusion:
The Tribunal remanded the matter to the adjudicating authority to compute the recoverable cenvet credit as per the observations and pass an appropriate order in accordance with the law. The appeal was disposed of accordingly.