Credit on workmen compensation insurance premium allowed- CESTAT

In a recent ruling dated 10.12.2019, Hon’ble CESTAT, Allahabad has held that service tax paid on Workmen compensation insurance premium is admissible as Cenvat credit for the Assessee. The Tribunal observed that the expenditure was incurred for running the business, the service has to be held to be an input service

Issue in brief:

The Appellant was aggrieved by the Order-in-Original and the Impugned order whereby the Department disallowed the Cenvat credit availed for Service tax paid on Workmen Compensation insurance premium purchased by the Appellant for its workmen. It was the finding of the Revenue that the said insurance policies were for personal use or consumption of employees, which falls within the exclusionary clause of Rule 2(l)(C) of Cenvat credit rules.

Our submissions

The Appellant had contested the impugned order on the ground that the insurance service availed by Appellant is an input service used in relation to output service of providing security services to its customers and not for personal use or consumption of employees. The said input service is a statutory requirement and also a need of business. In this regard, reliance was placed on Insurance policies and the invoices. The insurance taken for group of employees was in the nature of “Workmen Compensation Insurance Policy”. It was also submitted that the cost of the policies are borne by the Employer and not by the employee.


Hon’ble Tribunal observed that the Appellant is engaged in providing security services and detective agency service. On perusal of Invoices, and the Nature of Insurance policy, it was also observed that the Appellant subscribed to the insurance policies to cover the risk of bearing the liability for payment of compensation to the employees in case of any mis-happening. It was held that since the expenditure was incurred for running the business, the service has to be held to be an input service.


The final order dated 10 December 2019 was passed by Bench comprising of Hon’ble Member (Technical), Sh. Anil G. Shakkarwar.


The Appellant was represented by Adv. Gaurav Gupta, ALA Legal and the Respondent was represented by Sh. Anupam Kumar Tiwari.

The final order can be accessed here: Final Order_10.12.2019_CESTAT Allahabad

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