Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Dept. Can’t Classify Product as Zarda Scented Tobacco After Repeatedly Approving It As Chewing Tobacco: CESTAT *  Mere Uploading Of GST Order On Portal Is Not “Valid” Service: Tripura HC *  CGST Can Proceed Even If SGST Closed Similar Case Earlier: Delhi HC *  SC upholds 28% GST on online gaming with retrospective effect. *  West Bengal Govt cuts E-way Bill Threshold limit to Rs. 50,000 for intra-state goods movement. *  Criminal Prosecution Under Central Excise Act Can’t Continue After CESTAT Sets Aside Duty Demand on Merits: Punjab & Haryana High Court. *  Madras High Court Quashes GST Assessment Orders for Denial of Personal Hearing; Remands Matter Subject to 10% Deposit *  Ex Parte GST Order: Madras High Court Directs Immediate Removal of Bank/ITC Attachment Upon 25% Deposit *  J.K. Cement Receives GST Demand Order of Rs 8,02,113/- from Ahmedabad Tax Authority *  Delhi Police EOW Busts Alleged Rs. 128 Crore GST Fake Invoice Network. *  REPLY TO SCN CAN’T BE TREATED AS “EMPTY FORMALITY”: ORISSA HIGH COURT QUASHES GST DEMAND OF RS. 57.30 LAKH *  Challenge to CGST Provisions restricting ITC to Bonafide Purchasers : Allahabad HC issues notice *  CBIC Notifies Revised Customs Tariff Values for Edible Oils, Gold, Silver, Brass Scrap and Areca Nuts *  Delhi HC Orders Removal of GST Attachment After Statutory 1 Year Period Expired *  GSTAT Extends Relaxed Appeal Filing Guidelines till December 31, 2026 *  AO fails to Provide Import - Export Data from DGFT to Taxpayer for Reconciliation *  Gold, Silver Imports To Get Costlier As Govt Raises Customs Duty To 10%  *  GSTAT Enables Pre-Payment Access to Document Upload and Checklist for GST Appeal Filing *  GST Portal Restrictions Can’t Override Statute: Gujarat HC Allows Cross-State Transfer Of CGST ITC After Amalgamation *  Centre Revises HS Codes for Large Diameter Steel Pipes Used in Oil & Gas Pipelines *  Customs Duty Liability Arises On Warehouse Clearance Date: Supreme Court *  Government lifts export ban on de-oiled rice bran *  CESTAT Grants 12% Interest on Pre-Deposit for Investigation from Date of Deposit till Refund and Denies Interest on Interest. *  Government Overhauls GST Classification Framework for Non-Alcoholic Beverages; Fruit Juice Drinks, Milk-Based Beverages and Caffeinated Drinks to Attract Revised 5% and 40% GST Rates from May 1, 2026 *  India’s gross GST collections hit a record Rs 2.42 lakh crore in April, up 8.7% *  Customs clearance stalled, revenue hit over MRP dispute *  Shipping Corporation explores Middle East routes as Hormuz tensions disrupt cargo movement *  India, Kenya signs MoU for exchange of pre-arrival customs information *  No demand of Taxes under Reverse Charge if Tax Already Discharged by Service Provider under forward charge *  The India-New Zealand Free Trade Agreement, signed "once-in-a-generation" deal that eliminates tariffs on 100% of Indian exports to New Zealand
Subject News *  Consignment Sales Can’t Be Reclassified as Inter-State Sales Based on Pre-Agreement Evidence: CESTAT *  Exporter Can’t Be Denied Advance Authorization Benefit Due To ICEGATE Technical Glitch: Delhi High Court *  No GST Demand For Mere Wrong Set-Off Of IGST Credit Under CGST And SGST Heads: Kerala HC. *  Cenvat Credit Can’t Be Denied on Input Services Having Nexus With Manufacturing Activities: CESTAT *  Pending Proceedings Can’t Survive Without Saving Clause: Calcutta High Court Quashes GST Demand of Rs. 6.28 Crore After Omission of Rule 96(10) *  Madras HC Quashes GST Demands on TASMAC (Tamil Nadu State Marketing Corporation) Bar Licence Fee *  GST Proceedings Cannot Survive Omitted Rule Without Saving Clause: Calcutta HC *  Provisional Release Can’t Be Denied Solely On Dept. Suspicion Of Misclassification And Undervaluation Of Imported Goods: CESTAT *  Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court *  Punjab & Haryana HC Directs Reconsideration of Contractors’ Claim for Additional GST Payment After Tax Rate Hike From 12% to 18% *  S. 108 Statements Can’t Be Sole Basis Without Following Section 138B Procedure: CESTAT *  Bombay High Court Frames Key Questions on Mandatory Distribution of ITC U/s 20 CGST Act *  Filing of Annexure-B for Refund Applications involving Accumulated ITC using the offline utility in GST portal: GSTN *  No Service Tax on Parent Company’s Un-Invoiced Cost Allocations Without Actual Service or Consideration: CESTAT  *  Calcutta High Court Upholds GST Classification of Polypropylene Leno Bags as Plastic Products *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  GSTAT Issues Major Bench Allocation Framework; All Appeals to First Go Before Division Bench *  ITC Blocking Without Reasoned Order Violates Rule 86A; Punjab & Haryana HC Directs Release of Credit *  Allahabad HC Refuses Bail to CGST Superintendent In Rs. 70 Lakh Bribery Case *  S.130 Can’t Be Invoked Without Prior Tax Determination U/s 73/74: Allahabad High Court Quashes GST Confiscation Proceedings *  SC grants Bail to Rs 54cr GST case  *  Karnataka HC Sets Aside Duplicate GST Orders, Orders Fresh Hearing on GSTIN Cancellation *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  Transfer Of Unutilized ITC After Amalgamation - Supreme Court Issues Notice *  PUNJAB & HARYANA HC QUASHES GST CANCELLATION NOTICE FOR FAILURE TO PROVIDE CBIC ENQUIRY REPORT *  LICENSE FEE, TECHNICAL ASSISTANCE CHARGES NOT INCLUDIBLE IN CUSTOMS VALUE UNLESS THEY ARE A CONDITION OF SALE: CESTAT *  DELHI HC ORDERS REMOVAL OF GST ATTACHMENT AFTER STATUTORY 1 YEAR PERIOD EXPIRED *  CUSTOMS BROKER CAN’T BE FAULTED JUST BECAUSE EXPORTER’S GST REGISTRATION WAS PREVIOUSLY CANCELLED: CESTAT   *  Supreme Court Dismisses Review Plea Against Delhi HC Ruling Holding Real Operator Behind Fake GST Firms Liable As ‘Taxable Person  *  GST Appeal Can’t Be Rejected Merely Because DRC-07 Was Not Uploaded On Portal: Bombay High Court  

Comments

Print   |    |  Comment

PJ/CASE LAW/2016-17/3197

Whether Cenvat credit can be availed by insurance company on tables and chairs procured by them for clients?

Case:-ICICI LOMBARD GENERAL INSURANCE CO.LTD.  VERSUS  COMMR. OF S.T.,MUMBAI-I

Citation:- 2016(42) S.T.R.938(Tri.-Mumbai)

Brief facts:- This appeal is directed against Order-in-Original No. 38/STV-I/SKS/11-12, dated 13-11-2011.
The relevant facts that arise for consideration are the appellant being in the business of general insurance were paying Service Tax on the services rendered by them and were availing benefit of Cenvat credit of service tax paid on the various input services as also on capital goods and inputs. Appellant availed the Cenvat credit of Central Excise duty paid on Furniture and Fittings during the period 2006-07, 2008-09 and also on the Service Tax paid by the canteen contractor. Revenue is of the view that they could not have availed Cenvat credit on Furniture and Fittings as they were not capital goods and on the “Outdoor Catering Services” it was not related to the services rendered by them which are taxable. Show cause notice was issued which was contested on merits as well as on limitation; after due process of law, the adjudicating authority confirmed the demands raised on the ineligibility of Cenvat credit on Furniture and Fittings and canteen services, along with interest and imposed penalties under various sections and rules.
 
Appellant’s contention:- Learned Chartered Accountant appearing on behalf of the appellant draws our attention to the facts of the case and the impugned order. It is his submission that Furniture and Fittings are required by the appellant for rendering the services of general insurance. It is his submission that the said Furniture and Fittings may not classify as capital goods but are definitely inputs. He would draw our attention to definition of inputs in Rule 2(k) of Cenvat Credit Rules, 2004, (hereinafter referred to as rules). He would submit that the Cenvat credit on the canteen services as availed by the appellant is now confirmed by the Hon’ble High Court of Bombay in the case of Ultratech Cement - 2010-TIOL-745-HC-Mum = 2010 (20)S.T.R.577 (Bom.) = 2010 (260)E.L.T.369 (Bom.), holding that such credit is available. He would submit that as regards the Furniture and Fittings, the Tribunal in the case of Agarwal Foundries – 2015 (321)E.L.T.267 has held Cenvat as they are used for “any other purposes”. He would also draw our attention to C.B.E. & C. Circular No. 943/04/2011-CX, dated 29-4-2011 and specifically to point no. 3 in the said Circular.
 
Respondent’s contention:- Learned Departmental Representative on the other hand would emphasize that the appellant had availed the Cenvat credit on Furniture and Fittings holding them to be capital goods. He would submit that the said Furniture and Fittings do not classify as capital goods as per the definition in the rules, as they fall under different chapter and not those chapters which are treated as capital goods by the rules. He would submit that the ratio of judgment to the Tribunal in the case of Bharti Airtel Ltd. - 2012-TIOL-209-CESTAT-Mum = 2013 (29)S.T.R.401 (Tribunal) will apply which according to him is there has to be sufficient nexus between the inputs and input service, while in the case in hand is not forthcoming and the appellant had not evidenced that the Furniture and Fittings which have used for providing services. He would submit that the said Furniture and Fittings would become non-excisable goods accordingly, the Cenvat credit is not applicable.
On the Cenvat credit availed on catering services, he reiterates the findings of the adjudicating authority.
 
Reasoning of judgement:-The issue that needs to be decided in the case in hand is whether during the material period, appellant is eligible to avail Cenvat credit of the Excise Duty paid on Furniture and Fittings and the Service Tax paid on “outdoor catering services” or otherwise.
As regards the Cenvat credit of the Service Tax paid on catering services, the law is fairly settled by a judgment of Hon’ble High Court of Bombay in the case of Ultratech Cement (supra). The Hon’ble High Court has categorically stated that Cenvat credit can be availed on the Service Tax paid on the portion which is being paid by the canteen contractor. The Hon’ble High Court has also held that Service Tax paid on contribution or value of the canteen services enjoyed by the employees will not be available as Cenvat credit. In view of this, we hold that appellant is eligible to avail Cenvat credit to the extent of Service Tax paid by the canteen contractor and is not eligible to avail Cenvat credit of the Service Tax paid on the value of the services utilized by the employees of the appellant. Lower authorities are directed to reworkout the demand as per the judgment of Hon’ble High Court of Bombay and also recover interest at appropriate rate from the appellant.
As regards the Cenvat credit availed on the Furniture and Fittings, we find that the said furniture and fittings are nothing but tables and chairs which were procured by appellant during the relevant period. It is a common knowledge that any insurance company is required to have chairs and tables to render services to their clients. In our considered view, the said tables and chairs are used for rendering services of general insurance, accordingly, the appeal filed by the appellant on this issue needs to be allowed and we do so.
The reliance placed by the learned Departmental Representative on the judgment of Bharti Airtel (supra) will not carry their case any further, as we find in that case the Tribunal has recorded a clear findings that the appellant therein had not established that products were used for purpose of providing mobile telephone services, on the other hand, in the case before us, we find that the appellant has been taking a consistent plea that these tables and chairs are utilized for rendering the services as the employees need to sit and work on these tables and chairs.
In view of the foregoing, in the facts and circumstances of this case, we hold that the appellant is eligible to avail the Cenvat credit of Excise duty paid on Furniture and Fittings and also the Service Tax paid on canteen services as indicated herein above.
The impugned order to that extent which is contested before us is disposed of as indicated herein above.
 
Decision:-Appeal disposed of
 
Comment:-The analogy of the case is that CENVAT credit can be availed on tables and chairs procured by insurance company as they may not be capital goods but they are definitely inputs, as they are used to provide services to clients.

Prepared By:-Rakshay

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com