TMI Blog2021 (4) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit bestowed by one legislation cannot be taken away or made highly difficult and impractical to be adhered to by another field of law and accordingly, the benefit was allowed despite specific exclusion by Rule 2(l) whereas in Ganesan Builders , CESTAT-Chennai has denied the benefit of Cenvat credit on input services following the definition of input service including the exclusion clause therein under Rule 2(l) of CCR, 2004, as amended w.e.f. 01.04.2011. This decision of the CESTAT-Madras in Ganesan Builders has been overruled by the Hon ble High Court of Madras specifically dealing with workmen compensation insurance policy . The Hon ble High Court of Madras has held that the Workmen Compensation Act, 1923 is a beneficial legislation and the policy taken by the assessee in that case does not name the employees but categorised the employees based on their vocation/skill. The insured in that case is the assessee and the intention of the policy is to protect the employees who work at the site and not to drive them to various forums for availing compensation in the event of an injury or death. The service in that case was not primarily for personal use or consumption of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ganesan Builders Ltd. is to be followed. 2. We heard both sides and perused the records. 3. The appellant herein has availed Cenvat credit on service tax paid on insurance premium paid in respect of workmen compensation insurance policy , which was denied by the lower authorities and hence, this appeal. When this matter was heard by the learned Single Member (Judicial), he found that contrary views had been expressed on the same issue by two benches of the same strength (both single member benches). Hence, the matter has been referred to a larger Bench for a decision. 4. The appellant is a service tax provider and avails Cenvat credit on the inputs and input services under Cenvat Credit Rules (CCR), 2004. Rule 2(l) of the CCR defines the input service as follows: (l) input service means any service,- (i) used by a provider of taxable service for providing an output service; or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of service tax paid on Workmen Compensation Insurance Policy is admissible to the appellant. It is the case of the appellant, that they are entitled for such Cenvat credit. 7. In Hydus Technologies India , a learned Member (Judicial) held that Cenvat credit is available in respect of service tax with respect to gratuity insurance, employees deposit linked insurance, employees health insurance, etc., on the ground that the benefit bestowed by one legislation cannot be taken away or made highly difficult and impractical to be adhered to by another field of law and accordingly, the benefit was allowed despite specific exclusion by Rule 2(l). Paragraph 7 of this order reads as follows: 7. Strong objections were put forward by the ld. AR with regard to the refund of Service Tax in respect of Group Gratuity Insurance, Employees Deposit linked Insurance and employee health insurance. He submitted that these services are excluded in the definition of input service and therefore the appellant is not eligible for refund. Though the ld. AR has put forward strong objections there is no document before me to establish that the services are availed for personal use or personal con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I find that the dispute relates to availment of CENVAT credit of service tax paid on the Insurance Service taken by the appellant for their workers at site. Admittedly, such insurance services have to be provided by an assessee in terms of the Employees State Insurance Act, 1948 and are for the welfare of the employees. The said services have also been held to be eligible input service for the purpose of availment or credit by various decisions of higher courts. 7. However, the crux of the matter in the present appeal is, as to whether such services continued to be covered by the definition of INPUT SERVICES after 1-4-2011, when a specific exclusion clause was introduced in the definition of Input Services. For better appreciation, the same is reproduced below: But excludes- (a)..... (b)...... (c) such as those provided to in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance, and travel benefits extended to employees on vacation such as Leave or Home Travel Concessions, when such services are used primarily for personal use or consumption of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and penalty. These show cause notice were adjudicated by the lower authority confirming the demand and the appeal was rejected by the Commissioner (Appeals) relying on the order of CESTAT-Chennai in Ganesan Builders . Hence, they filed the present appeal which has been referred to a Larger Bench to resolve the conflict between the decisions in Hydus Technologies India and Ganesan Builders. 11. Learned Counsel would submit that the decision of CESTAT-Chennai in the case of Ganesan Builders is no longer good law because it has been overruled by the Hon ble High Court of Madras, which decision is reported in 2019 (20) GSTL 39 (Madras). This judgment of the Hon ble High Court of Madras is binding on the Tribunal and hence they should be allowed Cenvat credit on the service tax paid on the premium. Thus, she would submit that both the cases of Hydus Technologies India by CESTAT-Hyderabad and Ganesan Builders by the Hon ble High Court of Madras stand in their favour and their appeal must be allowed. 12. Without prejudice to the above, she would submit that the exclusion under clause (C) of Rule 2(l) of CCR, 2004 inserted w.e.f. 01.04.2011 reads as follows: (C) suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policies. The appellant s contention that these policies are taken under the statutory obligation under Workmen Compensation Act, 1923 and hence Cenvat credit should be allowed on the service tax paid on insurance premium has no legal basis. He relies on the following case laws: a. Microsoft Global Service Centre (India) vs Comm [2020(10) TMI 57 CESTAT Hyderabad b. Bharat Fritz Werner Ltd vs Comm [2019 (6) TMI 67 CESTAT Bangalore] c. Sasken Technologies Ltd. [2019 (1) TMI-219-CESTAT Bangalore] d. Andritz Technologies Pvt. Td. [2019 (12) TMI 122 CESTAT Bangalore] e. Olam Information Services Pvt. Ltd. [2020 (5) TMI 318 CESTAT Chennai] f. Wipro Ltd [2018-TIOL-3256-CESTAT-BANG-LB] 16. He asserts that the ratio of the decision of the Tribunal in Hydus Technologies India is not correct because the Tribunal cannot modify the Cenvat Credit Rules and they should be applied as such. 17. Learned Authorized Representative would submit that in view of the above, the appeal filed by the appellant in the present case deserves to be rejected and the question may be decided against the appellant. 18. We have considered the submissions and have perused the records. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendering commercial or industrial construction service, construction of residential complex, works contract services and GTA Service (as a recipient) and the assessee is registered with the Service Tax Commissionerate. The copies of a few policies, which have been availed by the assessee, have been produced before us, which show that they are Workmen Compensation Policies. The name of the insured is the assessee, namely, M/s. Ganesan Builders Limited. The policies specify the area, where the construction works are being carried on and in the copies given to us the addresses are : No. 144, Rajiv Gandhi Salai, Chennai-41 and (ii) SIPCOT Industrial Park, Irungulam, Podur Village, Sriperumbudur. The description of the employees for whom premium has been paid are not described by their names, but by their vocation/skill, namely, Mason, Helper, Stone Cutter, Barbender and his Helper, Carpenter and his Helper, Painter and his Helper, Store Keeper, Electrician, Supervisor, Plumper, Welder, Tiles Mason, etc. Therefore, we are required to consider as to why the assessee is required to avail such a policy. This is so because of a statutory requirement under the Building and Other Constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any potential claim under sections 3 and 4 of the Act. 24. This is one of the insurance policies where the potential liability of the insured is indemnified by the insurance company. A few other such policies are: a) Reinsurance policies where the beneficiary is the primary insurer whose risk is partly covered by the reinsurance company. b) Third party insurance taken in respect of motor vehicles in which the beneficiary is not the third party who may be hit in an accident by the vehicle but the owner of the vehicle who will be liable to pay compensation to such third party with or without insurance. c) Professional liability insurance taken by a doctor where the beneficiary is not the patient who may at some stage suffer because of faulty performance of services by the doctor but the doctor himself. The patient who suffered will be eligible for compensation from the doctor as decided by the Courts. The doctor either has to pay the compensation out of his own pocket or take insurance policy to cover the risk. In the latter case, the doctor is the beneficiary (insured) and not the patient. d) Product liability insurance: If the product of a manufacturer was ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
