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2024 (2) TMI 503 - AT - Service TaxEligibility of CENVAT credit - Input services or not - insurance service - Gold Care warranty scheme - premium for the master insurance policy issued to the appellant - The Cenvat credit was denied on the ground that, Insurance Company was providing service in relation to insurance of the gold belonging to the customers of the appellant and which was purchased from the appellant. - HELD THAT:- The issue in present appeals is similar to the issue considered by Larger bench in the matter of M/s South Indian Bank (supra) and held that insurance service provided by the Deposit Insurance Corporation to the banks is an “input service” and Cenvat credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the banks for rendering ‘output services’. Similarly in the matter of THE COMMISSIONER OF CENTRAL EXCISE SERVICE TAX & CUSTOMS, BANGALORE (ADJUDICATION) , THE COMMISSIONER OF SERVICE TAX VERSUS M/S. PNB METLIFE INDIA INSURANCE CO. LTD. [2015 (5) TMI 68 - KARNATAKA HIGH COURT], the issue that came up for consideration before the Karnataka High Court was whether an assessee can avail Cenvat credit of service tax paid on re-insurance services by treating the said service as an “input service”. PNB Metlife India Insurance Company was carrying on life insurance business and on the insurance policy issued by it, service tax was charged from the customers. It also procured re-insurance service from overseas insurance companies and availed Cenvat credit of service tax paid on such services received by it. The Cenvat credit was denied by the Department for the reason that re-insurance service cannot be considered as an “input service” since it takes place after the insurance policy is issued. The Hon’ble High Court noted that since re-insurance has to be taken under Section 101A of the Insurance Act, 1938, it is a statutory obligation and, therefore, has to be considered as having nexus with the “output service” and, therefore, would be an “input service”, for which Cenvat credit can be availed. Hon’ble High Court held that “We only reiterate that the issuance of insurance policy by insurer, and then taking of reinsurance by it, is a continuous process, and in the facts of the present case, it cannot be said that the same would not be an ‘input service’ eligible for Cenvat credit within the meaning of Rule 2(l) of the Cenvat Credit Rules, 2004”. Further, held that denial of such CENVAT credit would be against the ethos of Cenvat credit policy, as the same would amount to double taxation, which is not permissible in law.” Regarding finding of the Adjudicating authority denying the benefit on the ground that the document produced by the appellant are without proper serial number, considering the provisions of Reserve Bank of India Act, 1934 on Financial Institutions and also by considering the proviso of Rule 4(a)(1) Service Tax Rules, 1994, any document by whatever named called would be used in the place of an invoice, bill or challan. Thus, the reason given by the Adjudicating authority for such finding is per se illegal and unsustainable. Appeal allowed.
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