2023 (9) TMI 569 - AT - Service Tax

Liability of appellant to pay service tax on agency commission received on behalf of RBI - Denial of CENVAT Credit - telephone in residence of employees - medical insurance - Corporate club Membership. Liability of appellant to pay service tax on agency commission received on behalf of RBI - HELD THAT - The said issue has been settled by the Hon ble Apex Court in the case of CST-BANGALORE VERSUS CANARA BANK 2023 (5) TMI 137 - SC ORDER , wherein the Hon ble Apex Court has held that the commission received by the scheduled bank on behalf of the RBI, is not taxable service - thus, the demand of service tax on the agency commission received on behalf of the RBI by the appellant, the appellant is not liable to pay service tax. Denial of cenvat credit on telephone in residence of employees - HELD THAT - In this case, it is a fact that the telephone has been installed to the residence of employees for use of their business purposes in order to stay connected 24 X 7 with the employees of the Bank. In that circumstances, reliance on the decision of this Tribunal in the case of JSW ISPAT STEEL LTD VERSUS COMMISSIONER OF CENTRAL EXCISE 2014 (2) TMI 776 - CESTAT MUMBAI , wherein this Tribunal has held Undisputedly, in this case, the telephone service and air travel services have been availed by the appellants in the course of business activity as a manufacturer of excisable goods. Therefore, the issue is no more res integra - thus, cenvat credit allowed to the appellant on telephone service in question. Denial of cenvat credit on medical insurance - HELD THAT - It is required to provide medical insurance service in terms of Indian Bank Association for all employees and it is a part and parcel of employee cost for the Bank and these employees are working strength of the Bank for providing output services. In that circumstances, by relying the decision of the Larger Bench of this Tribunal in the case of M/S. RELIANCE INDUSTRIES LTD., VADODRA VERSUS COMMISSIONER CENTRAL EXCISE SERVICE TAX (LTU) , MUMBAI 2022 (4) TMI 1357 - CESTAT MUMBAI (LB) , it is held that the appellant is entitled to take the cenvat credit on medical insurance premium made by the appellant in their employees. Denial of cenvat credit on Corporate club Membership - HELD THAT - It is a fact that the Membership has been taken by the appellant as corporate membership themselves and the same is for the purposes of business meetings with top industrialist and their clients for promotion of their business . In that circumstances, relying on the decision of this Tribunal in the case of M/S EMCO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE-MUMBAI-III 2023 (5) TMI 379 - CESTAT MUMBAI , wherein this Tribunal has held that the corporate membership of the club was utilized for business meetings and sales promotion - thus the appellant is entitled for cenvat credit on corporate club membership. Appeal allowed.

Summary

Issues Involved:
1. Liability to pay service tax on agency commission received on behalf of RBI.
2. Denial of cenvat credit on telephone in residence of employees.
3. Denial of cenvat credit on medical insurance.
4. Denial of cenvat credit on Corporate club Membership.

Issue (a):
The Hon'ble Apex Court held that commission received by scheduled banks on behalf of RBI is not a taxable service, based on the notification exempting certain taxable services provided to or by the RBI. Therefore, the appellant is not liable to pay service tax on agency commission received on behalf of the RBI.

Issue (b):
Cenvat credit is allowed on telephone service installed in the residence of employees for business purposes, as it has a nexus with the business activity. Relying on previous Tribunal decisions, the appellant is entitled to cenvat credit on the telephone service.

Issue (c):
The appellant is entitled to cenvat credit on medical insurance premium for employees as it is part of employee cost and has a direct nexus to output services. This decision is supported by a Larger Bench decision of the Tribunal.

Issue (d):
Cenvat credit is allowed on corporate club membership as it is utilized for business meetings and sales promotion, based on Tribunal precedent. The appellant is entitled to cenvat credit on corporate club membership for the purposes of business meetings with top industrialists and clients.

The demand of Rs.1,66,041/- on delayed payment, which was not contested by the appellant, is upheld, while the rest of the demand is set aside. The appeal filed by the appellant is allowed with consequential relief, if any.