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TMI Blog2024 (6) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... o General Insurance Co. Ltd., for covering the risk of the business travel abroad including specific clauses for emergency medical facility/expense, loss of baggage/documents and baggage delay, flight delay etc., which has direct nexus on the availability of employee at the project site abroad for completion of the output services. As the insurance services as above are in the nature of services availed for providing output service in terms of ensuring that the project site, personnel employed for providing output service are protected for providing continuous and uninterrupted service, these cannot be categorised as being in the nature of insurance service for personal use or consumption of employees. Air travel agent services - HELD THAT:- In respect of air travel agent services provided to their employees, sample documents of American Express Business Travel, travel agency service provided by American Express (India) Pvt. Ltd., Gurgaon indicate that the travel arrangements are for travel abroad as employee for business purposes. Thus, these services are not covered under the exclusion clause (C) of Rule 2(l) ibid. The dispute in respect of availment of Cenvat credit on insurance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals-II), GST Central Excise, Mumbai. 2. The relevant facts that arise for consideration in this case are that the appellant herein is inter alia engaged in providing information technology service amongst other services and is registered with the jurisdictional Service tax authorities. The appellant is eligible to avail Cenvat credit of service tax paid on inputs, capital goods and input services received by them for providing output services in terms of Cenvat Credit Rules, 2004 (CCR). In providing the output services of information technology service, resources of skilled manpower are employed and they have to frequently travel to foreign countries for providing software services for completion of projects assigned to them. Therefore, the appellant had obtained insurance service in terms of Employees State Insurance Act, 1948 through various insurance service providers and had taken Cenvat credit of the service tax paid on such input service. Further, the appellant had availed services of travel agents for booking of the air tickets for travel of such skilled employees and executive staff in relation to their travel to foreign countries for the projects assigned to them. Similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutory requirement under the Employees State Insurance Act and being a Corporate Entity, they had to provide for insurance of employees for ensuring that the workforce is available for uninterrupted provision of output service. He also stated for the Cenvat Credit taken by the appellant on bonafide belief as permitted under the law and filing of refund objected by the department on technical reasons, cannot be a ground for imposition of penalty. 3.3 Learned Advocate relied upon the following judgments in support of their stand :- (i) CIT Vs. Chandulal Keshavlal Co. (1960)38I.T.R. 601(S.C.) (ii) Union of India Vs. Hansoli Devi (2002)7 S.C.C. 273 (iii) CBIC Circular No. 943/04/2011-CX dated 29.04.2011 4. Learned Authorised Representative (AR) appearing for the department, on the other hand, would submit that the definition of input service under Rule 2(l) ibid has undergone a change, which needs to be considered. He would draw my attention to the said change and submit that prior to 01.04.2011, the definition clearly indicates that the same should be used in providing output services. He would submit that post 02.04.2011, the definition input service has undergone a change, which exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to avail the Cenvat credit on various input services, we would like to refer the relevant legal provisions contained in Cenvat Credit Rules, 2004 as it existed during the disputed period in respect of the taxable service under dispute. Definitions. 2. In these rules, unless the context otherwise requires, (l) input service means any service,-- (i) used by a provider of output service for providing an output service;or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation up to the place of removal; but excludes (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, there are certain exceptions to this exclusion are also given in the form of except for provision of certain services , except when used by certain category of persons , when such services are not primarily used for specified use etc. 7.1 In order to examine whether a particular service is covered as inputs service , either it could be covered under category (i) or (ii) and should not fall under the exclusion category under (iii) above. As regards the Cenvat credit availed in respect of insurance services, I find that to the extent that such services are not used primarily for personal use or for consumption of any employee, they would qualify as eligible input service by being not specifically covered under the clause (C) of Rule 2(l) ibid. The sample invoice produced by the appellant indicate that these are for Group Insurance Policy provided by Ergo General Insurance Co. Ltd., for covering the risk of the business travel abroad including specific clauses for emergency medical facility/expense, loss of baggage/documents and baggage delay, flight delay etc., which has direct nexus on the availability of employee at the project site abroad for completion of the output service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the road. Under the Workmen s Compensation Act he has to obtain the Insurance Policy covering the risk of the employees. The Employees State Insurance Act takes care of the health of the employees also and casts an obligation on the employer to provide insurance services. Under these circumstances, this Group Insurance Health Policy though is also a welfare measure is an obligation which is cast under the Statute that the employer has to obey. Section 38 of the Employees State Insurance Act, 1948, mandates that subject to the provisions of the Act, all employees in factories or establishments to which this Act applies shall be insured in the manner provided by this Act. May be the employees also have to contribute but the employer is under an obligation to take an insurance policy and contribute his share. Therefore, the said Group Insurance Health Policy taken by the assessee is a service which would constitute an activity relating to business which is specifically included in the input service definition. 4.3 Learned AR argued that apart from insurance the employees are also availing the medical allowances and therefore medical insurance risk coverage is nothing but welfare of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-2011. The question considered therein was as to whether the assessees are entitled to claim Cenvat credit for the service tax paid on Insurance/Health Insurance policy. The Division Bench held that in so far as Insurance coverage to the employees is concerned in the course of employment if the employees suffer injury or dies, there is a vicarious liability imposed on the employer to compensate the employee. If the employer employs its own transportation facility in order to cover the risk which also includes the risk of workers who are covered in that statutory establishment, he has to take the insurance policy with which the vehicle cannot go on the road. Even for entering into the premises to meet the obligations under the workmen s compensation Act he has to obtain the Insurance Policy covering the risk of the employees. The employee State Insurance Act takes care of the health of the employees also and casts an obligation on the employer to provide insurance services. Under these circumstances, this Group Insurance Health Policy though is also a welfare measure is an obligation which is cast under the Statute that the employer has to obey. Section 38 of the Employees State In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Cenvat Credit Rules, 2004. The said services are - outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees such as Leave or Home Travel Concession. The amendment indicates when such services are used purely for personal use for consumption of any employee, the Cenvat credit cannot be allowed. On perusal of the records, I find that the appellant has been taking the insurance service and air travel agency service on which Cenvat credit is sought to be denied relying upon the said amendment to Rule 2(l) of the Cenvat Credit Rules, 2004, is incorrect as these services are utilized for the purposes other than personal use of employees or for consumption of employees. Thus, the input tax paid on these services would be available as Cenvat credit for under CCR, 2004, even after the amendment brought into effect from 02.04.2011. 9. In view of the foregoing, I hold that the impugned order is liable to be set aside to the extent of denial of Cenvat credit in respect of insurance services and air travel agency services, as in my considered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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