Bombay High Court
The Commissioner Of Central Tax And ... vs Axis Bank Ltd on 20 December, 2018
Author: M.S.Sanklecha
Bench: Akil Kureshi, M.S.Sanklecha
S.R.JOSHI cexa-167-2018.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CENTRAL EXCISE APPEAL NO.167 OF 2018
The Commissioner of Central Tax
& Central Excise, Mumbai Central
Commissionerate .. Appellant.
v/s.
Axix Bank Ltd., .. Respondent.
Mr. Jitendra B.Mishra, for the Appellant.
Ms. Mansi Patil i/b. Cenex Services, for the Respondent.
CORAM: AKIL KURESHI &
M.S.SANKLECHA, JJ.
DATE : 20th DECEMBER, 2018.
P.C:-
This is an Appeal under Section 83 of the Finance Act, 1994 (the Act) read with Section 35G of the Central Excise Act, 1944 (the Excise Act). It take exception to the order dated 15 th February, 2017 passed by the Customs, Excise and Service Tax Appellate Tribunal (the Tribunal).
\
2 The Revenue urges the following questions of law for our consideration:
"(a) Whether the Group Insurance Health Policy taken by the assessee for its employees, is an "input service" as defined under Rule 2 (1) of the Cenvat Credit Rules, 2004 and the CESTAT was right in allowing the CENVAT Credit on the same?
1 of 6 ::: Uploaded on - 26/12/2018 ::: Downloaded on - 26/12/2018 23:28:52 ::: S.R.JOSHI cexa-167-2018.odt
(b) Whether the Real Estate Agent Service to provide accommodation by the assessee to its employees, is an "input service", as defined under Rule 2(1) of the Cenvat Credit Rules 2004 and the CESTAT was right in allowing the CENVAT Credit on the same?
(c) Whether the Event Management Service availed by the assessee for organizing events, is an "input service", as defined under Rule 2(1) of the Cenvat Credit Rules 2004 and the CESTAT was right in allowing the CENVAT Credit on the same?
3 Respondent is a Banking Company. It is engaged in providing various banking and financial services. It is registered under the Act for rendering banking and other financial services, Business Auxiliary Services etc., 4 Re Question (a):-
(i) Respondent-Assessee during period April, 2003 to March, 2011, took CENVAT Credit of service tax paid to the Insurance Companies. This on account of Insurance taken out for its employees.
(ii) The authorities under the Act denied the benefit of CENVAT Credit taken on the service tax paid to the Insurance Companies for Insurance of its employees. This on the ground that, this expenditure are for the personal benefit of the employee and not in relation to business. This was by, inter alia, relying upon the definition of input services under the CENVAT Credit Rules 2004 (CENVAT Credit Rules) w.e.f. 1st April, 2011.
(iii) In appeal, the Tribunal by the impugned order held that the authorities under the Act mis-directed itself in denying the benefit of CENVAT Credit in respect of the service tax paid to the Insurance Companies. This on account of relying upon the definition of input 2 of 6 ::: Uploaded on - 26/12/2018 ::: Downloaded on - 26/12/2018 23:28:52 ::: S.R.JOSHI cexa-167-2018.odt services in CENVAT Credit Rules, which was effective from 1 st April, 2011 while the appeal involves the period prior to April, 2011 i.e. April, 2003 to March, 2011. Under the definition of input services as provided in Rule 2(1) of CENVAT Credit Rules as existing till March, 2011, there was no exclusion of Insurance services from the definition of input services. Therefore, there is no reason to restrict the definition of input services as found in Rule 2(1) of the CENVAT Credit Rules. It also relied upon the decision of the Karnataka High Court in Commissioner of Income Tax v/s.
Micro Labs Ltd 265 STR 383. (iv) We find that on a plain reading of the definition of input services in
Rule 2(1) of CENVAT Credit Rules ,2010 as is in existence during the period from April, 2003 to March, 2011, the amounts paid to the Insurance Companies for Insurance of the employees is input service. This is particularly, so as there is no exclusion clause therein, as was provided by the amendment in April,2011. We observe that taking of Insurance for the employees used in providing output service as it enables the employee to work with a peace of mind. Therefore, the benefit, if any, to the employee is incidental and not the primary purpose/object of taking insurance cover for its employees. In any case, this service would also stand covered by inclusive part of the definition of input services as provided in Rule 2 (1) of the CENVAT Credit Rules, prior to April, 2011.
(iv) In the above view, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.
3 of 6
::: Uploaded on - 26/12/2018 ::: Downloaded on - 26/12/2018 23:28:52 :::
S.R.JOSHI cexa-167-2018.odt
5 Re Question (b):-
(i) The Respondent took credit of CENVAT service tax paid to Real
Estate Agent while obtaining their services to procure residential accommodation. This to enable the Respondent to take flats on leave and licence and allot them to their employees during the time they are posted at a particular station.
(ii) The authorities under the Act denied the benefit of Cenvat Credit on the service tax paid on availing of the services of Real Estate Agents. This in view of holding that payment made to Estate Agent was not an input services as it was for the personal benefit of the employee. Therefore, outside the scope of input services as defined in Rule 2 (1) of the CENVAT Credit Rule.
(iii) In appeal, the impugned order of the Tribunal found that services are received by the Respondent used in the providing of output services. It held that the issue stands concluded in favour of the Respondent-Assessee by the decision of the Co-ordinate Bench of the Tribunal in Gateway Terminals v/s. CST 39 STR 1027 and Tata Kirloskar v/s. C.C.Ex 47 STR 106 - where service tax paid to Real Estate Agent for obtaining their services in providing residential accommodation to its employees is eligible as CENVAT Credit.
(vi) We find that the services of a Real Estate Agent is obtained by the Respondent. This for the purpose of allotting accommodation to its employees when posted at a particular station. This services would be covered by the definition of input services under Rule 2(1) of the CENVAT Credit Rules. These services enable the Respondent to keep its personnel available to provide services at a particular 4 of 6 ::: Uploaded on - 26/12/2018 ::: Downloaded on - 26/12/2018 23:28:52 ::: S.R.JOSHI cexa-167-2018.odt station. Thus, it has a nexus to the output services being provided by the Respondent. Therefore, the Respondent would be entitled to avail of Cenvat Credit to the extent service tax is paid to Real Estate Agents.
(iv) In the above view, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.
6 Re Question (c):-
(i) The Respondent denied the CENVAT Credit of service tax paid to Event Management Services. This on the ground that the organizing of various events cannot be considered as business promotion events.
(ii) In appeal, the Tribunal by the impugned order found as a fact that the events are organized by the Respondent as a part of its business promotion activity. This, as it found that events are held specially to target high net worth customers. Thus, the service tax paid for obtaining Event Management Services would be an input services under Rule 2(1) of the Cenvat Rules. The impugned order also places reliance upon the decision of its Coordinate Benches in the case of Oceans Connect (I) Ltd., v/s. C.C.Ex. 46 STR 858 and John Deere (I) Pvt. Ltd., v/s. C.C.Ex.41 STR 990.
(iii) We find that the Tribunal has rendered a finding of fact that the services of Event Managements are obtained to organize the events.
These events are held/ organized by the Respondent to target people with high net worth so as to attract/ retain them as their constituents. Thus, these services are in the nature of sales promotion service and would eo-nomine fall within the inclusive 5 of 6 ::: Uploaded on - 26/12/2018 ::: Downloaded on - 26/12/2018 23:28:52 ::: S.R.JOSHI cexa-167-2018.odt part of definition of input service provided in Rule 2(1) of Cenvat Rules.
(v) Therefore, no fault can be found with the view of the Tribunal.
More particularly, in the absence of the Revenue being able to point out that this finding of Tribunal is perverse.
(vi) In the above view, the question as proposed, does not give rise to any substantial question of law.
7 Accordingly, Appeal dismissed. No order as to costs.
(M.S.SANKLECHA,J.) (AKIL KURESHI,J.)
6 of 6
::: Uploaded on - 26/12/2018 ::: Downloaded on - 26/12/2018 23:28:52 :::