CESTAT Bangalore Allows SEZ Unit Service Tax Refund On Employee Group Medical, Personal Accident Insurance

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore has set aside the rejection of a service tax refund claim filed by ANZ Support Services India Pvt. Ltd., an SEZ unit, holding that denying refund on the ground that employee group medical and personal accident insurance do not fall within “General Insurance Services” is “absolutely irrelevant” in the facts of the case.

A bench comprising Judicial Member P.A. Augustian and Technical Member R. Bhagya Devi while dealing with the department's objection that the insurance services did not fall within “General Insurance Services”, observed.

"The question of rejecting the refund claim on a ground that General Insurance does not include the specific insurance claimed by the appellant is absolutely irrelevant, in as much as the insurance is for the employees of the appellant. Moreover, the question of referring to the Cenvat Credit Rules for the admissibility of the refund is also misplaced since the refund is based only on the ground that specified services on which tax is discharged is used in the authorised operations which admittedly the appellant has satisfied.”

The bench was allowing appeals filed by ANZ Support Services India Pvt. Ltd., setting aside the order of the Commissioner (Appeals).

The appellant, an SEZ unit engaged in IT-enabled services, had claimed refund of service tax paid on group medical insurance and personal accident insurance for its employees under a 2013 notification.

The department had rejected the refund on the ground that these services were not included in the list of services approved by the Unit Approval Committee (UAC) and did not fall within “General Insurance Services.”

Before the tribunal, the appellant contended that Notification No. 12/2013-ST does not require services to qualify as “input services” under the CENVAT Credit Rules and that a refund is available where specified services are used for authorised operations in the SEZ.

The tribunal noted that there was no dispute that “General Insurance Services” had been specified by the Development Commissioner, service tax had been discharged on the services, and they were used for authorised operations. It held that denial of a refund based on classification of specific insurance policies was not justified.

It further held that reliance on the CENVAT Credit Rules to determine admissibility of refund under the notification is misplaced.

Referring to earlier precedents, including Lowe's Services India Pvt. Ltd., the Tribunal reiterated that non-inclusion of a service in the UAC-approved list cannot, by itself, be a ground to deny a refund when the services are otherwise covered and used for authorised operations.

In view of these findings, the tribunal set aside the impugned order and allowed the appeals with consequential relief.

Accordingly, the tribunal set aside the impugned order and allowed the appeals with consequential relief.

For Appellant: Advocate Preetha Mahadevan

For Respondent: M.A. Jithendra, Authorised Representative