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2025 (2) TMI 102 - AT - Service TaxDenial of Cenvat credit - service tax paid for Mandap Keeper Services in relation to their Annual Day celebrations - Mediclaim and personal accident policy premium paid to the employees. Mediclaim and personal accident policy premium paid to the employees - HELD THAT - In view the decision of the Larger Bench in M/S. TATA TELESERVICES (MAHARASHTRA) LIMITED VERSUS COMMISSIONER SERVICE TAX MUMBAI-II. 2024 (3) TMI 1407 - CESTAT MUMBAI LB the insurance premium paid by the appellant in respect of the insurance policies taken for the employees and their family members can be considered as activity relating to business for the period prior to 01.04.2011. Since the period involved in both the appeals is prior to 01.04.2011 it is found that the decision of the larger bench is squarely applicable to this case hence the appeals are sustainable and need to be upheld. Mandap Keeper Services - HELD THAT - Following the decision in M/s. Endurance Technologies Pvt Ltd. Vs. C.CEx. Aurangabad 2013 (8) TMI 601 - CESTAT MUMBAI it is found that the appeals are sustainable. Conclusion - The services in question indeed qualified as input services under the pre-01.04.2011 definition. The definition of input service prior to 01.04.2011 includes services related to employee welfare and business events thereby Cenvat credit for such expenses allowed. Appeal allowed.
The judgment from the CESTAT Bangalore involves the appeal by M/s. Geojit Financial Services Ltd., which was challenged due to the denial of Cenvat credit on certain input services by the Department. The core issues revolve around whether the Cenvat credit on 'Mandap Keeper Services' and 'Mediclaim and personal accident policy' premiums paid for employees can be considered as 'input services' under the definition applicable prior to 01.04.2011.
The primary legal question is whether the services in question qualify as 'input services' under the definition that existed prior to the amendment on 01.04.2011. The definition then included services used directly or indirectly in providing output services and those integrally connected with business activities. The appellant argued that the services in question were used for business purposes and were thus eligible for Cenvat credit. They contended that the definition of 'input service' during the relevant period did not expressly prohibit such credits. The appellant emphasized that employee-related expenses like mediclaim policies and event-related expenses like those for 'Mandap Keeper Services' are integral to business operations, impacting employee performance and client relations. Relevant precedents cited by the appellant included judgments from CCE Vs. Gold Star Alloys (India) Ltd., Stanzen Toyotetsu India Private Limited Vs. CCE, and M/s. Tata Teleservices (Maharashtra) Ltd. Vs. CST, which supported the notion that input services should encompass employee-related benefits and event-related expenses as they relate to business activities. The Court considered the appellant's reliance on the decision in M/s. Tata Teleservices, which held that Cenvat credit on insurance policies for employees is permissible if the expenditure is borne by the employer. This decision emphasized that input credit is a statutory concession that must align with the statutory framework. The Tribunal found that the appellant was entitled to Cenvat credit on the insurance premiums for employees and their family members, as these expenses were related to business activities. Regarding the 'Mandap Keeper Services', the Court referred to the decision in M/s. Endurance Technologies Pvt. Ltd., which recognized such expenses as integral to business operations. The Tribunal agreed with this precedent, acknowledging that such events are part of business activities, especially when they involve stakeholders and employees. The Tribunal concluded that the services in question indeed qualified as 'input services' under the pre-01.04.2011 definition. The appeals were thus allowed, granting the appellant the relief sought, and the demands for Cenvat credit denial were overturned. In summary, the Tribunal's significant holding is that the definition of 'input service' prior to 01.04.2011 includes services related to employee welfare and business events, thereby allowing Cenvat credit for such expenses. This interpretation aligns with the broader understanding of business-related activities and the precedents cited, reinforcing the notion that services integral to business operations are eligible for input credit.
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