2025-VIL-584-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax - CENVAT credit on service tax paid to the insurance agents, exempted services – Appellant issues both taxable and exempt insurance policies and engages insurance agents to sell these policies. The appellant has availed CENVAT credit on the service tax paid to the insurance agents -Demand for reversal of CENVAT credit on services used exclusively for exempted insurance policies, and services provided in the non-taxable territory of Jammu & Kashmir - Whether the appellant is eligible to avail CENVAT credit on the services of insurance agents used for both taxable and exempt insurance policies – HELD - The insurance agents engaged by the appellant provide services for both taxable and exempt insurance policies. The agents do not have separate licenses for taxable and exempt policies. When the input service is commonly used for providing both taxable and exempt services, the appellant can either reverse the CENVAT credit proportionately under Rule 6(3A) or pay 6% of the value of the exempted services under Rule 6(3)(i) of the CENVAT Credit Rules. Thus, there is no bar to take the CENVAT Credit in respect of commonly used input services, so long as one of these two options are followed by the assessee – From the documentary evidence it is clear that the Agent is providing both the services commonly. Therefore, the invoice raised by him showing the Service Tax component may consist of both the taxable and exempt insurance services. This would fall under the category of common service and not under the category of exclusively exempt service - Since appellant are not in a position to bifurcate the input services used for rendering both taxable and exempt services, they take the CENVAT Credit for the all the input services invoices and they are reversing the CENVAT by paying the Service Tax of 6% / 8% in terms of Rule 6(3) (i) of the CCR, 2004 - The Department did not provide any evidence to show that the appellant had availed CENVAT credit on input services used exclusively for providing exempted services. Therefore, the demand confirmed on this ground is set aside – The impugned order is set aside and the appeal is allowed - Whether the demand for the period 2008-09 and 2009-10 is barred by limitation - HELD - To invoke the extended period of limitation, the department needs to prove wilful suppression or fraud with intent to evade tax. The appellant, being a public sector undertaking, had disclosed all relevant information in its returns and there was no evidence of wilful suppression. The demand for the period 2008-09 and 2009-10 is time-barred and it is set aside.
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