ST - Insurance auxiliary services, Real Estate agent services and Event Management services provided to Axis Bank are Input services: CESTAT
By TIOL News Service
MUMBAI, MAR 29, 2017: CENVAT credit amounting to Rs.4.69 crores is denied by the CST, Mumbai-I. It is the case of the department that there is no direct nexus between the services availed and the output service provided by the bank and, therefore, the services are not Input services.
The categories under which the Bank availed the credits are -
++ Insurance Auxiliary Service (Rs.3.45crores)
++ Real Estate Agent Service (Rs.16.35 lakhs)
++ Event Management Service (Rs.1.08crores)
The stay application filed before the CESTAT was disposed thus -
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ST - CENVAT - Rule 2(l) of CCR, 2004 - By no stretch of imagination can events conducted by Event Management Company and buying & supplying movie tickets to woo customers be considered as promotion of business activities of a bank - prima facie not an Input Service: CESTAT [para 5]
CENVAT - Rule 2(l) of CCR, 2004 - Insurance Auxiliary Service - Group insurance policy is a part and parcel of the salary and perks given to employees and, therefore, would qualify as an eligible Input Service: CESTAT [para 5]
CENVAT - Rule 2(l) of CCR, 2004 - Real Estate Agency Service - even though appellant claims that it is towards part of the employees perks, there can be a dispute whether it is a service activity or a welfare activity: CESTAT [para 5]
As the CENVAT credit involved in respect of Real Estate Agent Service & Event Management Service is Rs.1.25crores and the appellant has already reversed an amount of Rs.1.62crores, same is sufficient for hearing of the appeal - pre-deposit of the balance amount of dues adjudged is waived and stay granted: CESTAT [paras 5 & 6]
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We reported this order as 2014-TIOL-46-CESTAT-MUM .
The appeal was heard recently.
The CESTAT held thus -
Service Tax paid by insurance company:
++ It is noticed that the adjudicating authority has misdirected his findings as that the period of dispute is prior to 2011 i.e. April 2003 to March 2011. In April 2011 an amendment was brought in which we are not concerned with, as regards the availment of CENVAT credit of service tax paid for the services which are used for personal use of the employees. In the case in hand the period involved is undisputed that the assessee-appellant had taken group medical claim policy for the employees and availed CENVAT credit of service tax paid for such insurance company. We find that the issue is no more res integra as the Hon'ble High Court of Karnataka in the cases of Stanzen Toyotetsu India (P) Ltd - 2011-TIOL-866-HC-KAR-ST has held that CENVAT Credit cannot be rejected on the Group Insurance Health Policy taken by the employer. In view of the authoritative judicial pronouncements, we hold that the CENVAT credit of service tax paid on the insurance of the employees is eligible to the appellant.
Real estate agent services:
++ It is noticed that these services are contracted by appellant in order to scout and procure residential accommodation for a particular class of their employees to whom they are obligated to give free accommodation due to the posts held by them. …it was informed … that the agreement for Leave and Licence is entered by assessee-appellant with the flat owners and subsequently entitled employees are allowed to occupy the said residential premises till they are posted in a particular station. …Tribunal in the case of Gateway Terminals(I) Pvt. Ltd . - 2015-TIOL-1471-CESTAT-MUM has clearly held that CENVAT credit of service tax paid on the services of real estate agent who help in finding residential accommodation for their employees is permitted, as also the decision of the Tribunal in the case of Toyota Kirloskar Motors P. Ltd. - 2017-TIOL-78-CESTAT-BANG . In view of this we hold that CENVAT Credit availed by appellant is correct.
Event management services:
++ These services are availed by the appellant for organizing various events as part of business promotion activity and in order to do so, they had engaged professional event management personnel and the said even management personnel had paid the service tax and billed the appellant for the same. On perusal of nature of the services which are received by assessee-appellant as per the invoices produced before the lower authorities and before us, we find that these events are organized by assessee-appellant in order to attract more business from high network customers. The events organized are offering tickets of film shows to the said customers or organizing get to-gather to attract more capital form these high network clients. In our view the CENVAT credit taken/availed by assessee-appellant of service tax paid for event management services cannot be denied. This issue is also settled by the Tribunal in the case of John Deere India Pvt. Ltd. - 2016-TIOL-235-CESTAT-MUM.
Holding that the impugned order is unsustainable to the extent challenged, the same was set aside and the appeals of the assessee-appellant are allowed.
Revenue appeals seeking imposition/enhancement of penalty was, therefore, held to be infructuous and rejected.
(See 2017-TIOL-1036-CESTAT-MUM)
