Company can claim CENVAT Credit on Insurance Premium for Family Members of Employees till March 2011: CESTAT [Read Order]

CESTAT - ISD invoices - CENVAT credit -Taxscan

The Bangalore bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held that CENVAT Credit is allowable on service tax paid on payment of insurance premium in respect of the dependents/ family members since the same would amount to ‘input service.’

In the instant case, the assessee-Company availed input credit on the service tax paid on insurance policies under Group Insurance Scheme in the month of July 2010 amounting to Rs.1,67,912/-. The department initiated proceedings against the assessee by holding that the services received by them from the said insurance companies in relation to insurance scheme taken by them are not input service and hence, they are not entitled to avail CENVAT credit and utilize the same for payment of Central Excise duty.

Before the Tribunal, the assessee contended that the group medical insurance taken on the employees and their families is an essential input service; hence, the appellant is entitled to take credit of the service tax paid on such service.

After considering the submissions of both the parties, the bench found that prior to the amendment in the definition of input service w.e.f 1.4.2011, the scope of input service was very wide and it includes all the services which fall in or in relation to the manufacture of final product.

“Further, I find that the appellants are entitled to the CENVAT credit of service tax paid on insurance premium in respect of dependent/family members of the employees. Further, I find that the Tribunal in the case of Ramboll Imisoft Pvt. Ltd. has allowed the service tax paid on insurance premium in respect of the dependents/family members holding that it is an input service. By following the ratio of the same, I am of the view that the denial of CENVAT credit on insurance premium is wrong and untenable, therefore, I set aside the impugned order by allowing the appeal of the appellant.”

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