2018 (1) TMI 361 - AT - Central Excise

CENVAT credit - brokerage given to the agents for arranging residential accommodation for their employees - Held that - issue stand covered by the precedent decision of the Tribunal in the case of Gateway Terminals (I) Pvt. Ltd. v. CCE 2015 (10) TMI 1300 - CESTAT MUMBAI wherein it was held that brokerage service being incurred for finding residential accommodation for the assessee s employees is essential for ensuring availability of staff to carry on its business and as such has to be held as Cenvatable input service - credit allowed. CENVAT credit - Group Medical Insurance Service - Held that - the credit has been disallowed in toto without examining as to whether any extra premium stand paid by the appellant for covering the family members of the employees, this fact is to be examined by the lower authority for which purpose the matter stand remanded - matter on remand. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Denial of benefit of service tax paid on brokerage for arranging residential accommodation for employees.
2. Denial of benefit of service tax paid on Group Medical Insurance for employees and their family members.

Analysis:
1. The first issue pertains to the denial of the benefit of service tax paid on brokerage given to agents for arranging residential accommodation for employees. The Tribunal referred to precedents to support the appellant's claim. Citing the case of Gateway Terminals (I) Pvt. Ltd. v. CCE and Toyota Kirloskar Motor Pvt. Ltd. v. CCE Bangalore, the Tribunal held that brokerage charges for finding residential accommodation for employees are essential for business operations and therefore qualify as Cenvatable input services. Consequently, the Tribunal allowed the credit for such brokerage paid by the appellant.

2. Regarding the second issue of Group Medical Insurance, the Tribunal acknowledged that previous decisions deemed it as a cenvatable service. However, the Tribunal highlighted the importance of examining whether any extra premium was paid by the appellant for covering the families of the employees. Referring to the case of John Deere India Pvt. Ltd. v. CCE Pune III and other decisions, the Tribunal emphasized that insurance covering family members and dependents of employees might not be eligible for credit. As the lower authority had disallowed the credit without investigating the payment of extra premium for family coverage, the matter was remanded for further examination. The Tribunal clarified that service tax paid on Group Medical Insurance for employees is admissible, but any additional premium paid for family coverage would not be eligible for credit.

In conclusion, the Tribunal disposed of both appeals by allowing the credit for brokerage paid for arranging residential accommodation for employees and remanding the decision on Group Medical Insurance to determine the eligibility of credit for any extra premium paid for family coverage.