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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

CENVAT Credit - Whether the CENVAT credit availed and utilized by the assessee on the Service Tax paid for imported "Reinsurance Services" is an "input service' within the meaning of Rule 2 (l)(i) of the CENVAT Credit Rules, 2004 for the output services, i.e., Service of insurance the assessee was providing - Held that:- The process of issuance of an Insurance Policy by the Insurer and subsequent procurement of re-insurance policy from another company (which is a statutory requirement) is an int .....

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f the opinion that the stand taken by the Tribunal is correct that the transfer of a portion of the risk of the re-insurance has to be considered as having nexus with the output service, since the re-insurance is a statutory obligation and the same is co-terminus with the Insurance Policy.

Service Tax is levied for certain service rendered and the provision of giving the CENVAT credit is so that there may not be double taxation. If a person has collected service tax, no doubt the same .....

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n law), the same would be against the ethos of CENVAT credit policy, as the same would amount to double taxation, which is not permissible in law. - no interference is called for with the order of the Tribunal - Decided against Revenue. - CEA No. 56/2014 - Dated:- 9-4-2015 - Vineet Saran And S. Sujatha,JJ. For the Petitioner : Sri C Shashikantha, CGC For the Respondent : Sri G Shivadass, Adv. JUDGMENT The brief facts of the case are that the respondent - PNB Metlife India Insurance Company Ltd., .....

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e from over-seas Insurance companies and had availed CENVAT credit of Service Tax paid on such services received by it. The Commissioner of Central Excise (Adjudication), vide its order dated 2.12.2013, disallowed the CENVAT credit to the respondent -Insurer and held that Service Tax paid on re-insurance services received cannot be considered as Input Service since re-insurance takes place after the Insurance business is affected. Accordingly, for the period from April 2008 to March 2012 the Com .....

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ondent - Company filed an appeal before the Customs Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore, which has been allowed by the Tribunal by order dated 7.5.2014. Aggrieved by the same this appeal has been filed by the revenue raising the following substantial question of law:- "Whether the CENVAT credit availed and utilized by the assessee on the Service Tax paid for imported "Reinsurance Services" is an "input service' within the meaning of Rule 2 (l)(i) .....

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rer the Input service alleged to be given is after the Insurance policy has been issued by the Insurer, and Service Tax has been collected. According to the appellant, it is only after the insurance policy is issued by the Insurer that the re-insurance is taken from another company, on which it pays Service Tax and as such it would not be entitled to CENVAT credit, as the same cannot be termed as 'Input Service' within the meaning of Rule 2(l)(i) of CENVAT Credit Rules, 2004. It is also .....

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service recipient have no bearing on the nature of activities between the service provider and the re-insurer. It is thus contended that the respondent - Insurer would not be entitled to the benefit of CENVAT credit. 5. On the other hand, Sri G. Shivadass, learned counsel for the respondent has submitted that the business of insurance continues till the validity of the insurance policy and the process of re-insurance is an integral part of issuance of the insurance policy by the Insurer, more so .....

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s that 'Input Service' means service used by a provider of taxable service for providing an 'Output Service'. The submission of the learned counsel for the appellant that once the Insurance Policy is issued by the Insurer, the transaction comes to an end (and would not depend on the re-insurance policy) and as such the service provided would not come within the ambit of input service, is not worthy of acceptance. The process of issuance of an Insurance Policy by the Insurer and s .....

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