Service Tax

I. TRIBUNAL

8 M/s Reliance Industries Ltd, Vadodara vs. The Commissioner of Central Excise and Service Tax, Mumbai  [2022-TIOL-336-CESTAT-MUM-LB] Date of order: 18th April, 2022

CENVAT credit of service tax is available to the employer on premium paid towards medical insurance policy of employees under voluntary retirement scheme

FACTS
The Appellant is engaged in manufacturing petrochemical products at its Vadodara plant. It introduced a voluntary separation scheme for certain category of its employees. In terms of the scheme, the Appellant provided medical insurance policy to the employees who opted for it. The company claimed Rs. 1,33,37,699 as CENVAT credit on service tax paid on the policy. The CENVAT credit, thus availed by the Appellant, was disallowed on the grounds that the services are not confirming to the definition of ‘input service’ under Rule 2(I) of the CENVAT Credit Rules. The Commissioner raised a demand of the credit availed vide order dated 29th December, 2011. Aggrieved by the order, the Appellant filed the appeal before the Tribunal.

HELD
The Larger Bench of the CESTAT heavily relied upon the decision of the Supreme Court in Coca Cola India and Ultratech Cement. It observed that the medical insurance provided is a contractual obligation and not in the nature of gratuity. The scheme was necessary to keep the operations of the company cost-effective and profitable. The Trib