2024-VIL-313-CESTAT-MUM-ST
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SERVICE TAX CESTAT Cases

Service Tax - Larger Bench - Admissibility of CENVAT credit on insurance taken for the employees and for the family members of the employees – Whether service tax paid by the assessee on insurance premium in respect of the policy taken for the employees and their family members will be considered as 'activity relating to business', in the inclusive part of the definition of "input service" under Rule 2(l)of Cenvat Credit Rules, 2004 – HELD – Industries involved in banking, software, telecommunication and insurance services depend highly on skilled, quality and experienced manpower for providing quality output services. The employers in such industries face challenges in attracting and retaining the best available talents in the market and, therefore, have to extend benefits which are prevalent in the market to avoid brain drain and attrition. To retain the best resources for providing the necessary ‘output services’, industries provide this facility by way of a contractual obligation - the appellant would be entitled to avail CENVAT credit of the service tax paid on procuring insurance policies for the employees. The decisions of the Karnataka High Court in Milipore India and the Bombay High Court in Axis Bank clearly support this view. The decisions of the Tribunal in John Deere India, Emerson Export and Infosys Ltd. do not lay down the correct law - the judgment of the Supreme Court in Maruti Suzuki would not apply to the facts of the present case – The appellant would be entitled to avail CENVAT credit of the service tax paid on the insurance premium paid for procuring insurance services for the employees and their family members, as the said service would be an ‘input service’ under rule 2(l) of the CENVAT Rules, both under the main limb of the definition as also under the inclusive limb of the definition. It is not necessary for the appellant to establish an integral connection between the service and business of manufacture for the said service to be categorized as ‘input service’ under rule 2(l) of CCR, 2004 for the period prior to 01.04.2011 – Ordered accordingly - Eligibility to CENVAT credit on Group Insurance Policy taken for family members of the employees – HELD - the appellant is entitled to avail CENVAT credit of the service tax paid on the insurance premium for the employees and their family members in terms of the definition of ‘input service’ contained in rule 2(l) of the Cenvat Credit Rules, 2004 - The decision of the Tribunal in PTC Software correctly holds that CENVAT credit of the service tax paid for procuring insurance for the family members of the employees can be availed. The decisions to the contrary do not lay down the correct position in law - service tax paid on the insurance premium for the family members of the employees would be admissible CENVAT credit.
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