2018 (6) TMI 200 - AT - Service Tax

CENVAT credit - input services - repairs and maintenance of the insured vehicles by the Authorized Service Stations - insurgence company is hte recipient of service or not - Held that - From the definition of Rule 2 (l), the input service means any service used by a provider of taxable service for providing an output service. In this case, the output service rendered by the appellant is general insurance service. The general insurance service provided by the appellant basically insures the vehicle against damages. It is obvious that such service can be provided to the customer ie., owners of the vehicle only by way of reimbursement of the repair charges - the service tax paid on the bill of the ASS is to be considered as falling within the definition of the input service which is used for providing the output service of the vehicle insurance. The appellant being the service receiver will be entitled to the credit of service tax paid in terms of Rule 2 (l) ibid. Revenue has also raised the issue that the invoices issued by the ASS which is the document based on which the appellant has availed the Cenvat credit, is invariably in favour of the owner of the vehicle and is not in favour of the appellant - Held that - It is a fact that the insurance claims will be admitted by the appellant only after proper survey and further from the record it is seen that the credit availed by them is restricted to the portion of the repair bill reimbursed by the appellant. There is also nothing on record to suggest that the owner of the vehicle has also made claims for Cenvat credit. Consequently, not having the invoice in favour of the appellant should be considered only as a procedural infraction and should not be used to deny the credit which otherwise they are eligible. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Admissibility of Cenvat credit on repair services for insured vehicles under General Insurance services.

Detailed Analysis:

Issue 1: Admissibility of Cenvat Credit
The appellant availed Cenvat credit on service tax paid for repairs and maintenance of vehicles insured by them. The Revenue contended that such services do not qualify as input services under Rule 2 (l) of the CCR, 2004. The dispute revolved around whether the tax paid on repairs by Authorized Service Stations (ASS) could be considered a service used for providing the output service of general insurance.

Analysis:
The Tribunal analyzed the nature of the services provided by the ASS, where vehicle owners, insured by the appellant, approached them for repairs. The Tribunal concluded that the service tax paid on repairs falls within the definition of input service used for providing the output service of vehicle insurance. The appellant's payments for repairs were part of settling insurance claims, making the tax paid on repairs essential for providing the insurance service.

Issue 2: Recipient of Service
Another aspect discussed was determining the recipient of service. The Revenue argued that the service was provided only to the vehicle owner by the ASS, not to the appellant. The appellant contended that they should be considered the recipient of service, citing analogies to previous judgments and circulars.

Analysis:
The Tribunal referenced the distinction made in the Paul Merchants case between the beneficiary and recipient of service. It concluded that even though the vehicle owner is the beneficiary, the appellant is the recipient of the repair service. The TRU Circular further supported the appellant's claim as the service receiver entitled to Cenvat credit, aligning with the analogy drawn from health insurance services.

Issue 3: Documentation for Cenvat Credit
The Revenue raised concerns about invoices issued by ASS in the vehicle owner's name, not the appellant's. They argued that this procedural issue should disqualify the appellant from availing Cenvat credit.

Analysis:
The Tribunal acknowledged the procedural discrepancy in invoice details but emphasized that the appellant's credit availed was based on the portion reimbursed by them for repairs. The invoices being in the vehicle owner's name was deemed a procedural infraction, not substantial enough to deny the appellant's eligibility for Cenvat credit.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant based on the admissibility of Cenvat credit for repair services essential in providing general insurance output services.