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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 ..... t 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. Similarly, service tax paid on such input service was also taken as Cenvat credit. As the output services were exported, the appellant had filed refund claim for accumulated credit under Rule 5 of Cenvat Credit Rules, 2004. However, the Department objected to availing such Cenvat credit and for rejecting the refund claim on account of such ineligible input service credit and that the conditions stipulated in the Notification No.5/2006-S.T. dated 14.03.2006 have not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 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 exclude various input services which are used for personal consumption and employees' consumption and such services which are excluded include life insurance, health insurance and travel benefits extended to employees such as Leave or Home Travel Concession. He would submit that Cenvat credit has been availed post 01.04.2011 on such services should be denied as they are for the personal consumption of the employees. 5. Heard both side ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for- (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alth 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 the employees. 4.4 We have considered the rival submissions. Learned Counsel has argued that the insurance is strictly in terms of Section 38 of ESI Act. In terms of the decision of Hon'ble Karnataka High Court (supra), so long as the insurance is in terms of Section 38 of ESI Act the credit of the service tax paid i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yees 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 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 view these are found to be eligible input service under Rule 2(l) of the Cenvat Credit Rules, 2004, in the present factual matrix of the case. Accordingly, in partial modification of impugned order dated 14.02.2018 to the above extent, I allow Cenvat Credit for an amount of Rs.18,24,678/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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