By Puloma Dalal, Jayesh Gogri Chartered Accountants
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Rebate on export of services allowed for house-keeping services and denied for group insurance.
Facts:
The assessee was denied rebate claim on export of services on the ground that services of group insurance, health policy, medical policy and housekeeping services are not ‘input services’.
The assessee claimed that the term ‘input service’ is very wide and covers all services connected with the business activities. The appellants relied on the Madras Tribunal’s judgment in the case of Sundaram Fasteners Ltd. v. CCE, Chennai, (2010 TIOL 1342) and Tribunal’s decision in the case of CCE, Raipur v. Raipur Rotocast Ltd., (2010 (18) STR 466) for claiming CENVAT credit of service tax paid on group insurance. Moreover, they contended that in accordance with CAS-IV, expenses forming part of cost of providing services, should be considered as eligible ‘input service’.
The Department contended as under:
(i) Evidence was not shown to the effect that the house-keeping services were activities relating to business.
(ii) Group insurance, health policy, personal accident policy, etc. were not required to be provided mandatorily by the appellants and the same were provided as a welfare measure.
(iii) Drawing analogy from CAS-IV is not relevant as CAS-IV deals with valuation of captively consumed goods in manufacturing sector.
Held:
(i) CENVAT credit was allowed on procurement of house-keeping services as these were clearly necessary for rendition of service.
(ii) CENVAT credit on group insurance, health policy, etc. though forms part of cost of services rendered, the same could not be treated as ‘input service’ automatically. Moreover, since the group insurance was a welfare measure in the present case, the same could not be considered as integrally connected with the provision of service and therefore, was held to be ineligible.
