Custom, Excise & Service Tax Tribunal
Royal Sundaram Alliance Insurance Co ... vs Commissioner Of Gst&Amp;Cce (Chennai ... on 12 July, 2018
1
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos. ST/00451/2011 & ST/00520/2012
(Arising out of Orders-in-Original No. LTUC/105/2011-(C) &
LTUC/180/2012-(C) dated 31.03.2011 & 22.05.2012 respectively
passed by the Commissioner of Central Excise & Service Tax, LTU,
Chennai)
M/s. Royal Sundaram Alliance Insurance Company Ltd. : Appellant
Vs.
Commissioner of Central Excise & Service Tax, LTU, : Respondent
Chennai Appearance:-
Shri. R. Raghavan, Advocate for the Appellant Smt. P. Hemavathi, Commissioner (AR) for the Respondent CORAM:
Hon'ble Shri Madhu Mohan Damodhar, Member (Technical) Hon'ble Shri P Dinesha, Member (Judicial) Date of Hearing/Decision:.12.07.2018 Final Order No. 42157-42158 / 2018 Per Bench, These appeals arise against the orders of the Commissioner of Central Excise and Service Tax, Large Tax Payer Unit, Chennai in Orders-in-Original No. LTUC/105/2011-(C) & LTUC/180/2012-(C) dated 31.03.2011 & 22.05.2012 respectively.2
2. Shri. R. Raghavan, Ld. Advocate, appeared for the assessee and Smt. P. Hemavathi, Department Representative appeared for the Revenue.
3.1 The contentions of Ld. Advocate for the assessee for the sake of brevity are summarized below:
M/s. Royal Sundaram Alliance Insurance Co. Limited, the Appellant, is engaged in providing the services of General Insurance, and inter alia, extends Motor Insurance Policy for motor vehicles against theft, damage and third-party liability. In the case of Motor Vehicle Insurance, the indemnification could be either by way of full compensation for theft or total loss or by way of restoration of the damage to the vehicle. It is the obligation of the insurance company to provide the indemnity during the period the policy is in force. The issue pertains to the partial loss cases, where the Appellant restores the vehicle to the insured.
As a part of fulfilment of its obligation under the policy, the Appellant offers Cashless facility for repairing the vehicles and for this purpose enters into arrangement with various 3 cashless facility garages and preferred repairers across the country.
The Appellant pays the repair charges permissible directly to the Authorized Service Station (ASS), and the policy does not cover certain expenses such as depreciation. The balance amount is to be borne by the insured.
The Appellant utilized the above credit for the purpose of payment of service tax on the Insurance Services provided by them.
Credit presently under dispute was availed on the strength of invoices issued by the Authorized Service Station to the insured, on which the Appellant's name would be written/endorsed or the rubber stamp of the Appellant company would be affixed on it.
3.2 Ld. Advocate also submitted during the course of hearing that the issue involved in the above cases has already been considered and decided by this very Bench of the Tribunal, in the case of M/s.
United India Insurance Co. Ltd. Vs. C.C.E. & S.T., LTU, Chennai reported in 2018 (6) T.M.I. 200 - CESTAT Chennai in favour of the assessee, the relevant portion of which is extracted hereinbelow:
"6.3 ......4
...... The general insurance service provided by the appellant basically insures the vehicle against damages. It is obvious that such service can be provided to the customer ie., owners of the vehicle only by way of reimbursement of the repair charges. We are unable to see any other way by which the vehicle insurance service can be delivered to the customer. In this scenario, we are of the view that the service tax paid on the bill of the ASS is to be considered as falling within the definition of the input service which is used for providing the output service of the vehicle insurance.
6.4 The appellant has relied on the decision of the Tribunal in the Paul Merchants case (supra). We have gone through the said decision in which the Tribunal has made a distinction between the beneficiary of a service and the recipient of the service. The Tribunal observed that "the service recipient is the one who is obliged to pay for the services to the service provider and whose need is satisfied by the provision of the service, in other ways it is the buyer of the service". By following the above analogy, we come to the conclusion that the appellant becomes the recipient of the service of ASS even though the beneficiary remains the owner of the motor vehicle.
6.5 The appellant has also referred to the TRU Circular dated 26.02.2010, in which the following clarification has been given:-
"2.2 A large number of health insurance schemes are being offered by the insurance companies under which charges for hospitalization, surgery, post-surgical nursing etc. are generally paid by the insurance company. Such insurance policies, which fall under the category of general insurance service, are already taxable. Under general insurance service, an insurance company is a service provider to its clients. Under the proposed new service, tax is also being imposed on the medical charges paid by the insurance companies to the hospitals on behalf of a business entity for its employees. As such, the insurance company would be the service receiver and the tax paid by the hospital would be available to the insurance companies as credit."
Even though the above clarification has been given in the context of health insurance services, we are of the view that the same is relevant for deciding the claim of the appellant for Cenvat credit. In the present case, the appellant being the service receiver will be entitled to the credit of service tax paid in terms of Rule 2 (l) ibid.
6.6 The Revenue has also raised the issue that the invoices issued by the ASS which is the document based on which the appellant has availed the Cenvat credit, is invariably in favour of the owner of the vehicle and is not in favour of 5 the appellant. Hence, Cenvat credit cannot be allowed to the appellants. As discussed above, we have held that the above service is eligible to be considered as an input service for the appellant. In the peculiar facts and circumstances of the case, we appreciate that the invoices will be issued by the ASS only in favour of the vehicle owners who took the vehicle to them for repair. But it is a fact that the insurance claims will be admitted by the appellant only after proper survey and further from the record it is seen that the credit availed by them is restricted to the portion of the repair bill reimbursed by the appellant. There is also nothing on record to suggest that the owner of the vehicle has also made claims for Cenvat credit. Consequently, we are of the view that not having the invoice in favour of the appellant should be considered only as a procedural infraction and should not be used to deny the credit which otherwise they are eligible.
7. In view of the above discussions, we set aside the impugned order and allow the appeal."
4. The arguments of Ld. DR, Smt. P. Hemavathi, Commissioner, are summarized below:
The insured vehicles are not owned by the Appellant (the vehicles belong to the insured Policy holder) and the services of repair were rendered to the vehicle owner, and the Appellant is not the service recipient. Therefore, the Appellant is not eligible to avail credit in terms of Rule 2(l) of the Credit Rules, The invoices are not in the name of the Appellant. Therefore, Rule 9 is not satisfied, The credit was availed on documents addressed to the insured vehicle owner and not to the Appellant, there is a possibility 6 that the insured vehicle owner may also avail the credit and therefore credit may have been availed twice,
5. We have considered the rival contentions and have gone through the documents and also the order/judgment relied on. On going through the order of this Bench of CESTAT (supra) we find that the very issue involved here has been critically analysed and the order has been passed in favour of the appellant therein. In the event, by the principle of stare decisis, we follow the above ratio and set aside the orders of both the lower authorities and allow these appeals with consequential reliefs if any, as per law.
(Operative part of the order was
pronounced in open Court)
(P Dinesha) (Madhu Mohan Damodhar)
Member (Judicial) Member (Technical)
Sdd