Custom, Excise & Service Tax Tribunal
Eta Travel Agency Pvt Ltd vs Commissioner Of Gst&Amp;Cce(Chennai ... on 15 May, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
REGIONAL BENCH - COURT NO. - III
Service Tax Appeal No. 40419 of2018
(Arising out of Order-in-Appeal No. 309/2017 (CTA-I) dated 9.11.2017 passed by
the Commissioner of GST & Central Excise (Appeals - I), Chennai)
M/s. ETA Travel Agency Pvt. Ltd. Appellant
Arihant NITCO Park
No. 90, Dr. R.K. Salai, Mylapore
Chennai - 600 004.
Vs.
Commissioner of GST & Central Excise Respondent
Chennai North No. 26, Mahatma Gandhi Road Chennai.
APPEARANCE:
Shri V.S. Manoj, Advocate for the Appellant Shri K. Veerabhadra Reddy, ADC (AR) for the Respondent CORAM Hon'ble Ms. Sulekha Beevi C.S., Member (Judicial) Final Order No. 40804 / 2019 Date of Hearing: 15.05.2019 Date of Decision: 15.05.2019 Brief facts are that the appellants are registered service providers for air travel agency service and Business Auxiliary Service. They were issued Show Cause Notice proposing to recover wrongly availed credit of service tax paid to an extent of Rs.1,28,610/- on input services such as rent-a-cab service, vehicle insurance, group insurance medi-claim service, staff welfare and travel expenses. After due process of law, the original authority confirmed the demand 2 along with interest and imposed penalty. In appeal, Commissioner (Appeals) upheld the same. Hence this appeal.
2. On behalf of the appellant, ld. counsel Shri V.S. Manoj appeared and argued the matter. He submitted that the period of dispute is between October 2010 and September 2011. That prior to 1.4.2011 the definition of input services had a wide ambit as it included the words "activities relating to business". Hence all the services which have been availed prior to 1.4.2011 would be eligible for credit as these services were used for providing output service of the appellant.
2.1 With regard to the credit availed on health insurance service, the ld. counsel relied upon the decision of the Hon'ble High Court of Madras in the case of Ganesan Builders Ltd. Vs. Commissioner of Service Tax, Chennai as reported in 2019 (20) GSTL 39 (Mad.). He argued that although the Hon'ble High Court in the said decision had considered the issue of eligibility of credit in respect of workmen's compensation policy, all the insurance services which have been availed for the benefit of the employees when it is not for personal consumption would be eligible for credit.
3. The ld. AR Shri K. Veerabhadra Reddy supported the findings in the impugned order. He strongly opposed the contention put forward by the ld. counsel for the appellant with regard to the credit availed after 1.4.2011. He adverted to the exclusion clause in the definition of input service which has been introduced after 1.4.2011. He submitted that the credit availed on vehicle insurance, maintenance of vehicles, rent-a-cab services are not eligible for credit. So also it is submitted by him that the health insurance policy, staff welfare and 3 travel expenses are all used for personal consumption and therefore not eligible.
4. Heard both sides.
5. As pointed out by ld. counsel for appellant, the period of dispute is prior to 1.4.2011 as well as after. The definition of input service prior to 1.4.2011 had a wide ambit and it included the words "activities relating to business". There are several decisions of the High Courts as well as Tribunal which have consistently held that almost all the services narrated above are eligible for credit as it is availed for the business of manufacture / for providing output service. Therefore, I hold that the credit availed in respect of the services prior to 1.4.2011 would be eligible.
5.1 Now coming to post 1.4.2011, the definition of input services was amended so as to include certain exclusion clauses. As per clause (B) for definition of input services, the services provided way of renting of motor vehicle would be eligible only if the vehicle is capital goods for the service provider. In the present case, there is no evidence adduced by the appellant that the renting of motor vehicle was capital goods for the service provider. On such score, I find that the credit availed on rent-a-cab service is not eligible. 5.2 The appellant has availed credit on vehicle insurance as well as maintenance and repair of motor vehicle. Clause (BA) of the definition of input services excludes general insurance service as well as repair and maintenance of motor vehicles. Therefore, as per the exclusion clause the credit availed on vehicle insurance as well as maintenance and repair of vehicle is not eligible. 4 5.3 The ld.counsel has placed reliance on the decision of the Hon'ble High Court of Madras in the case of Ganesan Builders Ltd. (supra) for contending that the credit availed on health insurance / medi-claim benefit given to the employees is eligible. However, as per the exclusion clause (C) all the services availed primarily for personal use or personal consumption of an employee is not eligible for credit. In the present case, the insurance policies are not taken under any statutory mandate. It is an incentive given to the employees. The primary and most direct beneficiary of such insurance policy is the employee and not the company or the employer whereas in the case of workmen's compensation policy or any other policy which is required to be taken under statutory mandate, the primary beneficiary is the company or the employer and not the employee. This is because in case of untoward accident to the workmen, the company will have to utilize its fund for making the compensation to the injured workmen. To indemnify in case of accident, such statutory mandated policies are availed by the company and in such circumstances it is the company that benefits from the insurance policies. The Hon'ble High Court in the above case has held that when insurance policies are under statutory mandate, the same will be eligible for credit. In the present case, I am of the view that the insurance policy is not availed under any statutory obligation and it is for the personal consumption of the employee and therefore not eligible for credit. Therefore, the credit availed on all the services after 1.4.2011 are not eligible.
5.4 The ld. counsel has also pleaded to waive the penalty. From the above observation, it can be seen that the issue whether credit is 5 eligible on these services were under litigation for long time and interpretational one. Taking this fact into consideration, I am of the view that the penalty imposed is unwarranted and requires to be set aside, which I hereby do.
5.5 From the above discussions, I hold that the impugned order is modified to the extent of allowing the credit on all the services availed prior to 1.4.2011 only. The penalty imposed is also set aside. The appeal is partly allowed in the above terms.
(Dictated and pronounced in open court) (SULEKHA BEEVI C.S.) Member (Judicial) Rex