2018 (9) TMI 1584 - AT - Service Tax

CENVAT Credit - insurance services - Motor Insurance Policy for motor vehicles against theft, damage and third-party liability - service tax paid on reimbursement of the repair charges - Held that - The identical issue decided in the case of M/S. UNITED INDIA INSURANCE CO. LTD. VERSUS CCE & ST, LTU, CHENNAI 2018 (6) TMI 200 - CESTAT CHENNAI , where it was held that 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. Appeal allowed - Credit allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility of the Appellant to avail Cenvat credit for repair services under the Motor Vehicle Insurance policy.
- Interpretation of Rule 2(l) of the Credit Rules regarding the service recipient.
- Compliance with Rule 9 in relation to invoices.
- Possibility of double availing of credit by the insured vehicle owner.

Analysis:

Issue 1: Eligibility of Cenvat Credit
The Appellant, engaged in providing General Insurance services, extended Motor Insurance Policies covering theft, damage, and third-party liability. In cases of partial loss, the Appellant restored vehicles to insured parties through cashless repair facilities. The Appellant utilized credit for service tax payment based on invoices from Authorized Service Stations (ASS). The Tribunal noted the precedent in M/s. United India Insurance Co. Ltd. case, determining that service tax on repair charges falls within the definition of input service for providing vehicle insurance. The Appellant's role as the service recipient was acknowledged, even though the vehicle owner was the beneficiary. The Tribunal emphasized that the Appellant's credit availing was valid, despite invoices being in the vehicle owner's name.

Issue 2: Interpretation of Rule 2(l) of Credit Rules
The Commissioner argued that the Appellant, not owning insured vehicles, was ineligible for credit under Rule 2(l) as they were not the service recipient. However, the Tribunal, following precedent, recognized the Appellant's entitlement to credit as the service recipient, aligning with the principle of stare decisis.

Issue 3: Compliance with Rule 9 and Possibility of Double Credit
The Commissioner contended that invoices not in the Appellant's name violated Rule 9, suggesting a risk of double credit availing by the insured vehicle owner. The Tribunal dismissed this argument, emphasizing the Appellant's rightful credit claim based on the repair reimbursement role, irrespective of invoice details. The Tribunal's decision favored the Appellant, setting aside lower authorities' orders and allowing the appeals with appropriate reliefs.

In conclusion, the Tribunal upheld the Appellant's eligibility for Cenvat credit on repair services under Motor Vehicle Insurance policies, emphasizing the Appellant's role as the service recipient and dismissing concerns regarding invoice specifics and double credit availing. The judgment aligned with precedent and legal interpretations, providing clarity on credit entitlement in such insurance scenarios.