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M/s. Ramboll IMI Soft Pvt. Ltd. Versus CC, CE & ST, Hyderabad

2016 (6) TMI 1071 - CESTAT HYDERABAD

Cenvat Credit - Input services - providing output services to State of Jammu & Kashmir and to other parts of India - The department is of the view that when the Finance Act, 1994 itself is not applicable to Jammu & Kashmir, the services rendered in that State are exempted services. - CENVAT credit on service tax paid on insurance premium in respect of dependants / family members of the employees. - Held that:- The department cannot construe the services provided to Jammu & Kashmir as exempte .....

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r do not fall in the category of exempted services. - Rule 6(3)(1) of CENVAT Credit Rules will not apply. Further, the group insurance services availed for the benefit of employees qualify as input services. The period involved is prior to 01/04/2011 when the definition of input service had a wide ambit. -disallowance of credit on insurance services is illegal and unjustified. - Demand set aside - Decided in favor of assessee. - Appeal No. ST/3139/2012 - Final Order No. A/30200/2016 - Da .....

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nt that appellant availed irregular credit on two grounds. Firstly that appellant availed CENVAT credit of service tax paid on input services for providing output services to State of Jammu & Kashmir and to other parts of India. Section 64 of Chapter V of the Finance Act, 1994 excludes the applicability of service tax to the State of Jammu & Kashmir. Therefore the audit team observed that appellant is bound to reverse the CENVAT credit availed on common input services as provided under R .....

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d raising the above allegations. After due process of law, the original authority disallowed the credit and confirmed the demand of ₹ 1,30,291/- along with interest on the first count and ₹ 2,39,191/- along with interest on the second count besides imposing equal amount of penalties. The appellant filed appeal before the Commissioner(Appeals) and vide the order impugned herein, the Commissioner(Appeals) upheld the same. Hence this appeal. 2. On behalf of the appellant, the learned co .....

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common input services used in taxable and non-taxable output services. The appellant therefore did not get an opportunity to reply to the allegation that services provided in the State of Jummu & Kashmir is exempted service. The appellant had replied stating that the notice does not clarify what exactly is meant by the words non-taxable services . The learned counsel pointed out that Rule 6(2) of CENVAT Credit Rules comes into application when the manufacturer / service provider avails credi .....

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upport from the decision rendered in ECIL Rapsiscan Ltd. Vs. CCE, Cus & ST, Hyderabad [2014(35) STR 398 (Tri. Bang.)]. With regard to the second allegation i.e. disallowance of credit on service tax paid on insurance premium, the learned counsel submitted that the policies were taken for the benefit of the employees. The nature of the policy being floater policy, it included the family members also without extra premium. He pleaded that the appeal may be allowed. 3. Against this, the learned .....

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-249-CESTAT-KOL]. He argued that the credit on service tax paid on insurance premium is not admissible as it includes not only employees but also their family members. He pleaded that the appeal may be dismissed. 4. I have heard both sides carefully and perused the appeal papers. The first issue is whether appellants are liable to reverse the credit availed on common input services used for rendering services in Jammu & Kashmir. Undisputedly the appellants have used common input services for .....

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mp; Kashmir. The department has construed or rather confused the services rendered in Jammu & Kashmir to be exempted services. The observation made by Commissioner(Appeals) in this regard is reproduced as under:- 6.1. As per the definition given in Rule 2(e) of CENVAT Credit Rules Exempted services means taxable services which are exempt from the whole of the service tax leviable thereon and includes services on which no service tax is leviable under Section 66 of the Finance Act. Since the .....

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credit on the input services for providing output services to the state of Jammu & Kashmir. In this regard, the demand confirmed by the lower authority is justified. 5. It is the case of department that as the appellant availed credit on common input services for providing services to the State of Jammu & Kashmir and rest of the country, the appellant ought to have maintained separate accounts as the services provided in Jummu & Kashmir is exempted and services provided to rest of th .....

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65 of Finance Act, provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person as the case may be, and the expression provider and provider shall be construed accordingly. The definition of output service includes only the taxable services provided by a person. The definition of input service is given in Rule 2(l). Input service means any service used by a provider of taxable service for providing an output service. Undeniably, the services .....

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endering output services which are chargeable to tax as well as exempted services. The services rendered in Jammu & Kashmir are not chargeable to service tax and therefore are not taxable services. But this does not make them exempted services also. A service becomes an exempted service when by notification or law, the service tax payable on such service is exempted. Rule 6(2) does not apply to a situation where the service provider renders both taxable services and services which are not su .....

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