Sundaram Finance Pvt. Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
The appeal challenged an Order-in-Original dated 31.08.2016 that confirmed a demand of service tax, interest, and penalty under Section 78 of the Finance Act, 1994 for the period 2011-12 to September 2014. The dispute concerned the appellant’s availment of CENVAT credit on manpower services received from two agencies while acting as a corporate agent for insurance companies and as a mutual fund distributor.
The Department alleged that the manpower services were used exclusively for providing insurance auxiliary services and mutual fund distribution services. Since service tax on these services was either paid by the recipient under the reverse charge mechanism or the services were exempt, the Department contended that the manpower services did not qualify as eligible input services. Accordingly, it sought recovery of the credit availed along with interest and penalty, also invoking the extended period of limitation on the ground of suppression of facts.
The appellant disputed the allegations and maintained that the manpower supplied by the agencies was not used exclusively for insurance and mutual fund activities. According to the appellant, the manpower was deployed across multiple business verticals, including general insurance, home loans, mutual funds, investments, wealth advisory services, life insurance, and customer care services. The manpower suppliers issued consolidated bills without segregating personnel according to specific business activities. The appellant further stated that it had historically followed the mechanisms prescribed under Rule 6 of the CENVAT Credit Rules, 2004 for dealing with common input services and, from 01.04.2011 onwards, had complied with Rule 6(3B), which required banks and non-banking financial companies (NBFCs) to reverse 50% of the CENVAT credit availed.
