Order date – 09 December 2022

Facts –

• The Appellant, Reliance Industries Ltd, has discharged tax on procurement of ‘insurance service’ for covering medical claims of employees who had opted for the Voluntary Separation Scheme (VRS) initiated by the appellant on 6th March 2007.
• The policy enabled the candidate employees along with spouse to be covered to the extent of ` 5,00,000 for the period up to which they would, but for pre-mature separation under this scheme, have attained the age of retirement.
• The CENVAT credit on the same was disallowed on the ground that while medical insurance of employees has been approved as eligible ‘input service’ in several decisions of the Tribunal as well as appellate courts in conformity with rule 2(l) of CENVAT Credit Rules, 2004, its applicability to policy for the benefit of employees who have ceased to be on the rolls should not be countenanced.

Issue –

• Whether CENVAT credit can be claimed on insurance service for covering medical claims of employee?

Order –

• The Tribunal relied on the decision of the Larger Bench of the Tribunal held that credit can be availed on the amount of insurance premium paid by the appellant to the insurance company for availing medi-claim of employees who had opted for the VSS announced by the appellant as the service that was rendered would amount to “input service‟ in terms of rule 2(l) of the 2004 Rules, as it stood at the relevant time; it being in relation to activities relating to business.’
• Larger Bench held that the components of CAS-4 are also found on CAS-7 rendering both to be eligible for similar treatment. There is, thus, no scope for determination of facts afresh by the lower authority insofar as the present dispute is concerned. That aspect need not detain in the present circumstances just as other cited decisions pertaining to tax paid on insurance premium to cover spouse and family members of the employees are also no longer relevant.
• In view of the response of the Larger Bench to the reference, eligibility for CENVAT credit of tax paid on premium for continuation of medical cover for retiring employees under the special scheme stands settled in favour of the appellant.
• Hence the appeal allowed.