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Judgment
Appellant has filed these two appeals against the impugned order both dated 29/04/2019 passed by the Commissioner of Central Tax, Bangalore whereby the learned Commissioner has rejected the refund claim of the appellant towards Health Insurance Services and towards Meal Passes. Since the issue involved in both the appeals is identical, therefore both the appeals are taken up together for discussion and disposal.
Briefly the facts of the present case are that the appellants are a Private Limited Company registered under the Companies Act, 1956 and are also registered as a SEZ unit and are providing taxable services falling under the category of "Information Technology Software Service, Business Consultancy Service. Appellants have filed refund claims for 4 quarters for the period April 2016 to June 2017 seeking refund of service tax paid on the specified input services used for provision of authorized operations in the SEZ under Notification No. 12/2013-ST dated 01/07/2013. During the relevant period, the appellants have received services such as Group Health Insurance Service, Group Medical Insurance Service and Group Personal Accident Insurance Service (hereinafter referred to as insurance service) from M/s. Religare Health Insurance Company Ltd. which have been used for providing various authorized operations in the appellant company. The details of the various refunds filed and rejected by the authorities are given herein below:
Appeal No.
ST/20757/2019
ST/20776/2019
Period of Dispute
April 2016 to June 2016
April 2017 to June 2017
Amount of Refund rejected
Rs. 14,33,825/- towards Health Insurance Services
Rs. 29,02,376/- towards Health Insurance Services. Rs. 2,070/- towards Meal Passes
Refund claimed
Service Tax of Rs. 43,04,840/- paid on specified services received and used for authorized operations of the SEZ Unit
Service Tax of Rs. 47,68,507/- paid on specified services received and used for authorized operations of the SEZ Unit
Order-in-Original No. & Date
11/2018 dated 09/02/2018
12/2018 dated 09/02/2018
Order-in-Appeal No. & Date
30/2019 CT dated 29/04/2019
31/2019 CT dated 29/04/2019
Amount rejected by OIA
Rs. 14,33,825/- towards Health Insurance Services
Rs. 29,02,376/- towards Health Insurance Services and Rs. 2,070/- towards Meal Passes
The Department entertained the view that the appellants are not entitled to the refund of service tax paid on the specified services on the ground that those services are not falling under the default list of services approved by the Development Commissioner. Show-cause notices were issued to the appellant and after following the due process, the original authority substantially allowed the refund claim but rejected the refund claim in both the appeals towards Health Insurance Services in addition on Meal Passes in Appeal No. ST/20776/2019. Aggrieved by the order of the original authority, appellant filed appeal before the Commissioner and the learned Commissioner (Appeals) in both the cases allowed the refund by following the decision of this Tribunal in the appellant's own case for the prior period by holding that it is not necessary that the specified services must be approved by the Approval Committee and by taking the view that SEZ Act has an overriding effect over the Notification issued under the Finance Act, 1994. In spite of this finding, learned Commissioner proceeded to reject the refund claim on Health Insurance Services on the ground that the said service does not fall in the definition of 'input services' as provided in Rule 2(l) of CCR by resorting to exclusion clause (C). The learned Commissioner also rejected the refund claim of Rs. 2,070/- on Meal Passes holding that the same does not fall in the definition of 'input services'.
Heard both the parties and perused the records.
Learned Counsel appearing for the appellant submitted that the impugned orders are not sustainable in law as the same has been passed without properly appreciating the facts and the law and also binding judicial precedents on the identical issue. He further submitted that the ground for rejection of refund of service tax goes against the finding of the learned Commissioner himself wherein while relying on the Final Order of this Tribunal in the appellant's own case reported at Lowes Services India Pvt. Ltd. V. CCT, Bangalore reported at 2019 (1) TMI 180-CESTAT-Bangalore wherein it has been held that non-inclusion of services in the UACs list is just a procedural lapse and it cannot be considered a ground for rejection of refund which is otherwise eligible as long as the services have been availed for authorized operation of SEZ unit. He further submitted that the original order has rejected the refund claim primarily on the ground that the said Insurance Services are not covered in the default list of services approved by the Unit Approval Committee but the impugned order has nowhere disputed the fact that the services received by the appellants have not been used for the authorized operations of its SEZ unit. He further submitted that in terms of the Uniform List of Services approved by the Unit Approval Committee read with Ministry of Commerce & Industry letter No. D.12/25/2012-SEZ dated 19/09/2013 and subsequent letters dated 19/11/2013, 19/06/2014, 09/07/2014, the default list of services approved by the Department of Commerce, Ministry of Commerce & Industry includes "General Insurance Business Services" at Sl. No. 26. The General Insurance Business Services also form part of the default list of services specified by the Karnataka Special Economic Zone vide Circular No. 2/2014 dated 25/07/2014. Learned counsel for the appellant referred Advanced Law Lexicon by P. Ramanatha Iyer wherein "General Insurance" has been defined as under:
"General insurance - Broad classification of insurance business which covers transportation insurance, property insurance, pecuniary insurance and liability insurance. Usually contracts are of one year's duration, with a new contract negotiated at "renewal". Personal accident and sickness insurance and private medical insurance are also general insurance contracts. It is also known as general business (insurance)."
5.1. He also submitted that as per the definition of "General Insurance Business" cited supra it can be inferred that Medical Insurance and Personal Accident Insurance is covered under General Insurance Business and the same has been held so by the Tribunal in the case of Barclays Global Service Centre Pvt. Ltd. V. Commissioner of Central Tax, Pune-I reported in 2018 (362) E.L.T. 889 (Tri.-Mumbai). He also submitted that mere non-inclusion of services in the list of Unit Approval Committee shall not be a ground for rejection of refund claims and the learned Commissioner (Appeals) in spite of accepting the Final Order in the appellant's own case has rejected the refund claim pertaining to insurance services and Meal Passes primarily on the ground that the said services are not covered in the default list of services approved by the Unit Approval Committee as well as the fact that these services are specifically excluded from the definition of 'input services'. For this submission, he relied upon the following decisions:
· Lowes Services India Pvt. Ltd. V. Commissioner of Service Tax, Bangalore - 2019 (1) TMI 116-CESTAT Bangalore
· Mast Global Business Services India Pvt. Ltd. V. CCT, Pune -2018-VIL-601-CESTAT-BLR-ST
5.2. The learned counsel thereafter referred to Notification No. 12/2013-ST dated 01/07/2013 which provides exemption by way of refund of service tax paid on "specified services" received by the SEZ Unit and used for the authorized operations and submitted that the said Notification provides that if the "specified services" are used exclusively towards authorized operations, the person liable to pay service tax has the option not to pay the service tax ab initio subject to certain conditions or claim refund of service tax paid. He further submitted that General Insurance Business Services received by them have been undisputedly used for authorized operation and therefore, it is a 'specified service' as defined under the Notification No. 12/2013- ST dated 01/07/2013 as amended. He also submitted that the said Notification refers to "specified services" and not "input services" and the said two terms should be distinguished as per the provisions under the said Notification. He also submitted that the impugned order has erred in applying the requirement of the definition of "input services" under the Cenvat Credit Rules, 2004 to "specified service" as provided under Notification 12/2013-ST dated 01/07/2013. He also submitted that as per Section 26(1) (e) of the Special Economic Zones Act, 2005 read with Rule 31 of the Special Economic Zones Rules, 2006 prescribed for exemption from payment of service tax on services received by the SEZ unit or developer. Further Section 51 of the SEZ Act provides for overriding effect of the SEZ Act over other laws in force. He also submitted that the Notification issued under the Finance Act, 1994 cannot curtail the benefits provided under Section 26 of the SEZ Act. In this regard, he relied upon the following decisions:
· GMR Aerospace Engineering Ltd. V. Union of India - 2019 (31) G.S.T.L. 596 (A.P.)
· Cybercom Datamatics Information Solutions V. Commissioner of Service Tax, Mumbai-V - 2017-VIL-1055- CESTAT-MUM-ST
· Cummins Technologies India v. CCE & ST, Meerut-II - 2018-VIL-351-CESTAT-DEL-ST
· Mahindra Engineering Service Ltd. V. Commissioner of Central Excise, Pune-I - 2014-VIL-486-CESTAT-MUM-ST
5.3. He further submitted that the impugned order passed by the learned Commissioner (Appeals) is beyond the allegation levelled in the show-cause notice and hence cannot be sustained. For this purpose, he relied upon the decision in the matter of Commissioner of Customs, Mumbai V. Toyo Engineering India Ltd. reported in 2006 (201) E.L.T. 513 (S.C) wherein it has been held that the authorities under Act cannot travel beyond the show-cause notice. Learned counsel for the appellant did not press for refund of service tax on Meal Passes being the small amount of Rs. 2,070/- (Rupees Two Thousand and Seventy only).
On the other hand, the learned AR reiterated the findings of the impugned order.
After considering the submissions of both the parties and on perusal of the material on record, I find that the Commissioner (Appeals) in the impugned order has confirmed the rejection of refund claim pertaining to insurance services on the ground that the same is not covered under the "input service" definition under Rule 2(l) of Cenvat Credit Rules, 2004 which was not proposed/raised in the show-cause notice and hence beyond the scope of show-cause notice. The Hon'ble Apex Court in the case of Toyo Engineering India Ltd. cited supra and also in the case of Commissioner of Central Excise V. Gas Authority of India Ltd. - 2008 (232) E.L.T. 7 (S.C) has held that the authorities under Act cannot travel beyond the show-cause notice. Further I find that in the show-cause notice as well as in Order-in-Original, the refund has been rejected only on the ground that the said insurance services have not been approved by the Approval Committee of the SEZ and hence the appellants are not entitled to the refund. Further I find that the Commissioner (Appeals) in the impugned order has accepted the fact that approval is merely a procedural formality and by relying upon the decision of the Tribunal in the appellant's own case cited supra, he has allowed the refund but further proceeded to reject the refund by resorting to exclusion Clause (C) in the definition of "input service" as provided in Rule 2(l) of Cenvat Credit Rules, 2004. Hence, I find that both the impugned orders are not sustainable on this ground alone. Besides this, I find that even on merit the said services fall in the definition of 'insurance service' and has also been approved by the Unit Approval Committee read with Ministry of Commerce & Industry letter dated 16/09/2013 and subsequent letters dated 19/11/2013, 19/06/2014, 09/07/2014 which includes "General Insurance Business Services" at Sl. No. 26. Further, I find that the General Insurance Business Services also form part of the default list of services specified by the Karnataka Special Economic Zone vide Circular No. 2/2014 dated 25/07/2014. Further I find that this Tribunal in the case of Barclays Global Service Centre Pvt. Ltd. cited by the appellant it has been held that Medical Insurance and Personal Accident Insurance are covered under the General Insurance Business. I also find that it has been consistently held by the Tribunal in the appellant's own case as well as in other cases that mere non-inclusion of services in the list of Unit Approval Committee shall not be a ground for rejection of refund claim. It has also been held in the decision cited supra that the provisions of Special Economic Zones Act, 2005 has an overriding effect over other laws in force. In view of my discussion above and by following the ratios of the various decisions cited supra, I am of the considered view that the impugned orders are not sustainable in law and therefore I set aside the same by allowing both the appeals of the appellant.
(Order was pronounced in Open Court on 05/03/2021)