Cholamandalam MS General Insurance Co. Ltd. Vs Commissioner of G.S.T. & Central Excise (CESTAT Chennai)
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) considered the appeal filed by a general insurance company against an order denying CENVAT credit of service tax paid on invoices issued by motor vehicle dealers for the period from April 2010 to March 2015. The Department had also demanded interest and imposed penalties.
The appellant was engaged in providing general insurance services, including motor, marine and fire insurance. Pursuant to an agreement with Toyota Kirloskar Motor Company Pvt. Ltd., insurance policies were issued through the manufacturer’s dealer network. The dealers collected insurance premiums from customers and issued policies by accessing insurance brokers’ portals. Dealers received payouts calculated as a percentage of the Own Damage (OD) premium and issued invoices describing services such as provision of computing network connectivity, internet space, furniture, fixtures, consumables, staff salaries, computers and administrative support. The appellant paid the invoices along with service tax and availed CENVAT credit of the service tax reflected therein.
Following investigation by the Directorate General of Central Excise Intelligence (DGCEI), the Department alleged that the dealers had not actually provided the services described in the invoices. According to the Department, the payouts represented commission linked to insurance premiums but were camouflaged as business support services. It was alleged that the invoices did not reflect actual services rendered and, therefore, the appellant was not entitled to CENVAT credit. A show cause notice dated 14.10.2015 proposed recovery of the alleged inadmissible credit with interest and penalties. The adjudicating authority confirmed the demand, interest and penalties, leading to the present appeal.
