The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to United India Insurance by allowing the service tax refund claim of approximately 2 crores on the ground of non-violation of Rule 2(l) of the CENVAT Credit Rules (CCR),2004.
United India Insurance Company Ltd, the appellant assessee was engaged in providing the services of General Insurance business and having centralized registration for the services like General Insurance Business, Insurance Auxiliary Services, and Renting of Immovable Property Services.
The assessee appealed against the order passed by the adjudicating authority for disallowing the CENVAT of Service Tax paid of Rs.1,96,75,899/- under the category of ‘Service or Repair of Motor Vehicles’ carried out by Authorized Service Station (ASS) of motor vehicle manufacturers and service provided by the Salvager under Port services for refloating a grounded dredger.
S. Muthuvenkataraman, the counsel for the assessee contended that the service tax paid to the ASS as part of the repair bill can be considered as an input service under the definition 2(l) of the CCR and the input service means any service used by a provider of taxable service for providing an output service. In this case, the output service rendered by the assessee was general insurance service.
Harendra Singh Pal, the counsel for the department contended that the tax paid on the category of ASS cannot be considered as a service used for providing output service.
The Bench observed that a large number of health insurance schemes are being offered by the insurance companies under which charges for hospitalization, surgery, post-surgical nursing, etc. are generally paid by the insurance company. Such insurance policies, which fall under the category of general insurance service and the denial of credit are not legally sustainable.
The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) allowed the service tax refund claim which was paid by the assessee.
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