Tata Teleservices (Maharashtra) Ltd Vs Commissioner of Service Tax (CESTAT Mumbai)
Summary: The CESTAT Mumbai allowed the appeal of Tata Teleservices (Maharashtra) Ltd against an order confirming recovery of ₹88,53,123 of CENVAT credit under Rule 14 of the CENVAT Credit Rules, 2004, along with interest under Section 75 of the Finance Act, 1994 and an equivalent penalty under Rule 15. The dispute concerned CENVAT credit availed during 2007-08 to 2011-12 on insurance policies covering employees against workplace accidents, employees and their families under group mediclaim, and vehicles.
The adjudicating authority had denied the credit principally on the ground that there was no statutory obligation to obtain employee and family insurance and therefore the expenditure did not qualify as an input service connected with the appellant’s telecom business. The Tribunal noted that entitlement to credit on employee insurance was already settled by judicial precedent, particularly Fiamm Minda Automotive Ltd. v. Commissioner of Central Excise, Delhi-III, which followed the decision in Stanzen Toyotetsu India Pvt. Ltd. v. CCE, Bangalore.
The Tribunal held that the personal accident insurance credit could not be disallowed in the absence of any finding that the coverage extended beyond the workplace. It further held that vehicle insurance qualified as an input service, noting that there was nothing to establish use of the vehicles outside business activities and that insurance of vehicles is statutorily mandated. On group mediclaim insurance covering employees’ family members, the Tribunal relied upon the Larger Bench decision holding such insurance to be an eligible input service under Rule 2(l), including for the period prior to 01.04.2011, without requiring proof of an integral connection with the business of manufacture. Consequently, the demand founded on alleged ineligibility of the insurance-related CENVAT credit was held unsustainable and the impugned order was set aside, allowing the appeal.
