2015 (7) TMI 139 - AT - Service Tax

Denial of CENVAT Credit - Whether or not the appellants are entitled to CENVAT credit of service tax paid on the premium of group medi-claim and group accident policies of the employees - Held that - CENVAT credit on group accident and group mediclaim policies for employees and the service tax paid thereon are admissible as input service and input service tax credit. - Issue of admissibility of credit is covered by the decision of the Hon ble High Court relied upon by the learned counsel, the appellant is eligible for the benefit of credit of service tax paid on insurance premium for group mediclaim and accident. - Decision in the case of CST Bangalore Vs Team Lease Services Pvt Ltd 2014 (4) TMI 948 - KARNATAKA HIGH COURT followed - Decided in favour of assessee.

Summary

Issues Involved:
Determining entitlement to CENVAT credit of service tax paid on group medi-claim and group accident policies for employees.

Analysis:

1. Entitlement to CENVAT credit:
The main issue in this case was whether the appellants are entitled to CENVAT credit of service tax paid on the premium of group medi-claim and group accident policies for their employees. The lower authorities had disallowed the credit, arguing that the services had no nexus with the manufacturing activity. However, the learned counsel relied on a previous decision in the case of CST Bangalore Vs Team Lease Services Pvt Ltd, where it was held that such credit is admissible as input service and input service tax credit. The appellant had not recovered any amount for providing the insurance cover to the employees, which was supported by evidence in the form of a sample pay slip. The Tribunal found that the issue was covered by the decision of the Hon'ble High Court, and therefore, the appellant was deemed eligible for the benefit of credit of service tax paid on insurance premium for group medi-claim and accident policies.

2. Interpretation of "input service" definition:
The lower authorities had interpreted the definition of "input service" to cover only activities directly or indirectly related to the manufacture of goods or providing output services. They argued that the services in question did not have any nexus with the manufacturing activity. However, the Tribunal disagreed with this interpretation and relied on the decision in the case of CST Bangalore Vs Team Lease Services Pvt Ltd to support the admissibility of the credit for group accident and medi-claim policies. The Tribunal emphasized that the essential requirement for an input service is for it to be used in or in relation to the activity of manufacture, which was satisfied in this case.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the appellant's entitlement to CENVAT credit of service tax paid on group medi-claim and group accident policies for their employees. The decision was based on the interpretation of the definition of "input service" and the precedent set by previous judgments, ultimately granting the appellant the benefit of the credit.