Where an assessee has paid service tax on services, even if not strictly liable to do so, they are entitled to avail and utilize Cenvat credit, and the revenue cannot demand its reversal. Extended limitation periods are inapplicable where facts were already disclosed in statutory returns.

DR. RACHNA GUPTA

1. M/s Hriday Credit Co-operative Society Ltd (the appellant herein) is registered with service tax department being engaged in providing banking and financial services. During the course of audit of records of the appellant, department observed that the assessee is procuring Group Medical Insurance Policy for their members in their own name under Corporate Plan. They have entered into agreement with the Hriday Bizz Pvt. Ltd., Udaipur for collecting the premium along with the applicable taxes from the customers in respect of Group Medical Insurance Policy, who collects the same from the members and submit a detailed report to the appellant such as numbers of member and amount collected. On receipt of such report, the appellant takes group medical insurance policy from the insurance company and pays the premium to that company. After receiving the Group medical policy, the appellant raises the service tax invoices to the Hriday Bizz Pvt. Ltd., Udaipur for reimbursement of the premium paid by them on behalf of their members to the insurance company. The appellant deposited the service tax so collected to the Government exchequer through their CENVAT account which they have taken on the basis of payment of insurance premium to the insurance company.

2. Department alleged that the said activity is wrongly considered as input service. Hence, wrongly availed CENVAT Credit to the tune of Rs. 1,11,08,155/- on said input services for the period from 2014-15 to 2016-17. 2016-17. 16-17 was proposed to be denied and recovered from the appellant along with interest at the appropriate rate and proportionate penalties vide show cause notice no. 14/2017-18 dated January 023, 2019. The proposal was initially confirmed vide order in original no. 09/2019-20 dated 23.07.2019. The appeal against the said order has been rejected vide the order in appeal no. 869/2019 dated 24.10.2019. Being aggrieved the appellant is before this Tribunal.

3. We have heard Shri B.L. Narasimhan, Ms. Shagun Arora and Ms. Srishti Yadav, learned counsel for the appellant and Shri Aejaz Ahmad, learned authorised representative for the department.

4. Learned counsel for the appellant submitted that the appellant, is a co-operative society and had obtained group insurance policies for its member from the insurance companies approved by Insurance Regulatory Development Authority(IRDA). The insurance companies had charged service tax on provision of said services which was paid by the appellant. It is further mentioned that the appellant entered into an agreement with Hriday Bizz Private Limited (HBPL) permitting it to collect premium from its members along with its commission. The appellant raised invoices on HBPL equivalent to the premium collected along with service tax. The service tax on those invoices has also been paid by the appellant. Cenvat Credit availed on the said service tax paid is mentioned to have been wrongly denied.

4.1. Ld. Counsel further submitted that the Commissioner (Appeals) in the impugned order/ order under challenge has denied the credit on the ground that the insurance services were intended for personal consumption of members and that the credit was not admissible on insurance services. The appellant is also not registered with the IRDA and hence cannot provide insurance services. Also that the said service tax has been paid by the appellant. Hence, in terms of Rule 3 of Cenvat Credit Rules, 2004 appellant is eligible to avail the credit of the said service tax