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2024 (6) TMI 130 - AT - Service TaxCENVAT Credit - input services - Rent-a-Cab services - insurance services - Services excluded by the amendment after 02.04.2011 to the definition of Rule 2(l) of the Cenvat Credit Rules 2004. Rent-a-cab services - HELD THAT - The adjudicating authority in the original order had found that Rent-a-Cab operator services is in the nature of service provided by way of renting of a motor vehicle as specified in clause (B) to Rule 2(l) of the CCR 2004 and thus he denied the Cenvat credit. The impugned order also denied the Cenvat credit on the ground that the motor vehicles used by the appellant are not their capital goods and thus are squarely covered by Clause (B) of Rule 2(l) ibid - In the present case it is clear that the appellant had availed the service of Rent-a-Cab operator service in relation to provision of output service hence the link is fulfilled. The definition of capital goods provided for motor vehicles under clause (A) excludes motor vehicles falling under tariff headings 8702 8703 which covers under its scope (i) motor vehicles for the transport of 10 or more persons including the driver (ii) motor cars and other vehicles principally designed for the transport of persons including station wagons and racing cars. In the present case on perusal of the sample invoice indicating the input services availed on Rent-a-Cab operator service show that the type of motor vehicles used are main cars such as Volkswagen Vento car Toyota Altis Corolla Altis etc. It is found that the cars are classifiable under the tariff heading 87.02 if they can carry transport of 10 or more persons or under tariff heading 87.03 if they can carry transport of less than 10 persons - As these type of motor cars have been specifically excluded from the scope of coverage of motor vehicles under clause (viii) of the definition of capital goods provided under Rule 2(a) ibid it is found that the second limb of this requirement that the motor vehicle should be a capital goods is unable to be fulfilled and thus under clause (B) of Rule 2(l) ibid the input services availed in respect of such motor vehicles is excluded from the scope of definition of input services in the present case - cenvat credit denied. Insurance services - HELD THAT - It is found that to the extent that such services are not used primarily for personal use or for consumption of any employee they would qualify as eligible input service by being not specifically covered under the clause (C) of Rule 2(l) ibid. The sample invoices produced by the appellant indicate that these are for Corporate Fire and Allied Perils insurance policy provided by the New India Assurance Co. Ltd. Group Protection Solution Plan provided by Birla Sun Life Insurance Workmen Compensation Policy provided by the New India Assurance Co. Ltd. etc. As the insurance services as above are in the nature of services availed for providing output service in terms of ensuring that the office premises personnel employed for providing output service are protected for providing continuous and uninterrupted service these can be categorised as being in the nature of insurance service for personal use or consumption of employees. Thus these services are not covered under the exclusion clause (C) of Rule 2(l) ibid. The dispute in respect of availment of Cenvat credit on insurance service is no more open to debate as in a number of cases the Tribunal has held the same as admissible - reliance can be placed in M/S. HONDA MOTORCYCLE SCOOTER INDIA PVT. LTD. VERSUS CCE DELHI-III 2016 (8) TMI 308 - CESTAT CHANDIGARH . Thus Service Tax paid on insurance services for an amount of Rs.13, 38, 885/- are eligible to be availed of Cenvat credit as per statutory provisions. Services excluded by the amendment after 02.04.2011 to the definition of Rule 2(l) of the Cenvat Credit Rules 2004 - HELD THAT - The said services are - outdoor catering beauty treatment health services cosmetic and plastic surgery membership of a club health and fitness centre life insurance health insurance and travel benefits extended to employees such as Leave or Home Travel Concession. The amendment indicates when such services are used purely for personal use for consumption of any employee the Cenvat credit cannot be allowed. On perusal of the records it is found that the appellant have been taking the insurance service on which Cenvat credit is sought to be denied relying upon the said amendment to Rule 2(l) of the Cenvat Credit Rules 2004 which is incorrect as these services are utilized for the purposes other than personal use of employees or for consumption of employees. Thus the input tax paid on these services would be available as Cenvat credit for under CCR 2004 even after the amendment brought into effect from 02.04.2011. The impugned order is liable to be set aside to the extent of denial of Cenvat credit in respect of insurance services as input service under Rule 2(l) of the Cenvat Credit Rules 2004 - Cenvat Credit for an amount of Rs.13, 38, 885/- towards insurance services allowed - Cenvat credit in respect of Rent-a-Cab operator service for an amount of Rs.1, 97, 848/- denied - appeal allowed in part.
Issues Involved:
1. Eligibility to avail Cenvat credit on Rent-a-Cab services. 2. Eligibility to avail Cenvat credit on insurance services. 3. Imposition of penalty for availing Cenvat credit. Summary: 1. Eligibility to Avail Cenvat Credit on Rent-a-Cab Services: The appellant, a provider of various output services, availed Cenvat credit on Rent-a-Cab services. The learned consultant argued that Rent-a-Cab services are not excluded under clause B of Rule 2(l) of the Cenvat Credit Rules, 2004 (CCR) as these services are essential for providing output services like maintenance of telecom towers. However, the adjudicating authority and the impugned order denied the Cenvat credit on the ground that the motor vehicles used were not capital goods u/s 2(a) of CCR. The Tribunal upheld the denial of Cenvat credit amounting to Rs. 1,97,848/- for Rent-a-Cab services, as the vehicles used were not classified under capital goods. 2. Eligibility to Avail Cenvat Credit on Insurance Services: The appellant also availed Cenvat credit on insurance services, which was contested by the department. The learned consultant contended that these services are mandatory under the Employees State Insurance Act and are essential for ensuring uninterrupted provision of output services. The Tribunal referred to various judgments, including Reliance Industries Ltd. and Micro Labs Ltd., which supported the admissibility of Cenvat credit on insurance services. The Tribunal concluded that insurance services are not used primarily for personal use or consumption of employees and allowed Cenvat credit amounting to Rs. 13,38,885/-. 3. Imposition of Penalty: The learned consultant argued that the Cenvat credit was availed on a bona fide belief and its recovery due to technical objections should not result in a penalty. The Tribunal did not explicitly address the penalty issue in the final judgment, focusing instead on the eligibility of Cenvat credit for the disputed services. Conclusion: The Tribunal partially modified the impugned order dated 14.05.2019, allowing Cenvat credit for insurance services amounting to Rs. 13,38,885/- and upholding the denial of Cenvat credit for Rent-a-Cab services amounting to Rs. 1,97,848/-. The appeal was disposed of in these terms.
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