2014 (8) TMI 787 - AT - Service Tax

CENVAT Credit - General Insurance Services provided by the agents in Jammu and Kashmir - reverse charge - Held that - The Section 66A are not directly related to the facts of this case but concept of establishment most directly concerned with the receipt of the service will be equally applicable to the facts of this case and therefore the J & K branches are recipient of the service - it is very much clear that the insurance auxiliary services provided by the agents in the State of Jammu & Kashmir are not taxable. Therefore, the appellants are not liable to pay service tax for the said services of the insurance agents. In these terms, whatever credit is taken by the appellant is nothing but the refund of tax erroneously paid by them - CENVAT Credit taken by the appellant is nothing but refund of the service tax paid by them on the services on which they were not required to pay service tax - Decided in favour of assessee.

Summary

Issues:
Appeal against denial of CENVAT credit for services provided in Jammu & Kashmir.

Analysis:
The appellant, engaged in General Insurance Services, appealed against the denial of CENVAT credit for services provided in Jammu & Kashmir. The appellant appointed insurance agents in Jammu & Kashmir to promote their business, leading to a dispute over the tax liability on these services. The appellant contended that the services received in Jammu & Kashmir were not taxable, and thus, the CENVAT credit was wrongly denied. The core issue revolved around whether the services were received by the appellant at Pune or in Jammu & Kashmir.

The dispute centered on the interpretation of the place of provision of services, considering the locations of the service provider, recipient, and performance. The Circular clarified that the establishment directly concerned with the provision/receipt of service would be decisive. The introduction of Section 66A of the Finance Act further emphasized the importance of the establishment receiving the service. In this case, the Jammu & Kashmir branches were deemed the recipients of the services, aligning with the provisions.

The Tribunal analyzed precedents, including the decision in CIT v. Mahalakshmi Textile Mills Ltd., to support the appellant's claim that the CENVAT credit was a refund of erroneously paid tax. The Tribunal also cited Nitco Tiles Ltd. v. CCE Mumbai to emphasize that the bar of unjust enrichment did not apply in this scenario. Ultimately, the Tribunal held that the appellant was entitled to the CENVAT credit, setting aside the impugned order and allowing the appeal with consequential relief.

In conclusion, the judgment favored the appellant, recognizing their entitlement to the CENVAT credit for services provided in Jammu & Kashmir. The analysis delved into the nuances of service tax liability, the interpretation of relevant provisions, and the application of legal precedents to resolve the dispute effectively.