The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the demand of CENVAT credit of service tax availed on the employee’s health insurance and group accidental insurance policy on the ground of limitation.
Diamond Beverages Private Limited, the appellant assessee availed CENVAT Credit on motor vehicles and ‘rent a cab’ service under the bona fide belief as regards admissibility of the same and also on the Employees Group Insurance, Health Insurance, Personal Accident Policy.
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand for service tax along with the imposition of penalty and interest.
Shovendu Banerjee, the counsel for the assessee contended that the demand of service tax was barred by the limitation of time since the same was not issued within the normal time frame from the date of knowledge of such alleged irregularity and the extended period as invoked was not tenable, unwarranted and bad in law.
Further submitted that there was any willful suppression of fact nor there was any conscious or deliberate withholding of any information on the part of the assessee and the demand raised by the department was not as per the law and liable to be deleted.
K.Chowdhury, the counsel for the department relied on the decisions made by the lower authorities and contended that there was a contravention of CENVAT Credit Rules, 2004, and suppression of material facts as regards irregular availment and utilization of CENVAT Credit attributable to certain input services by the assessee.
The Bench observed that only a normal limitation period would be available to the department for recovery of ineligible CENVAT credit and the assessee was eligible to get the benefit of CENVAT credit of the service tax on the employee’s health insurance.
A single-member bench comprising P.K Choudhary (Judicial) held that the impugned order cannot be sustained and quashed while allowing the appeal filed by the assessee.
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