Customs, Excise and Service Tax Appellate Tribunal

Indian Overseas Bank Vs. The Commissioner of Central Excise & Service Tax

MANU/CC/0082/2022

10.06.2022

Service Tax

Bank can avail credit of the Service Tax on the deposit insurance service provided by DICGC

In facts of present case, on the basis of intelligence received that the Appellant-bank had wrongly availed CENVAT Credit in respect of the Service Tax paid on deposit insurance service provided by Deposit Insurance and Credit Guarantee Corporation (‘DICGC’), investigation was initiated by the Kochi Regional Unit of the Directorate General of Central Excise Intelligence (DGCEI). Scrutiny of documents and statements recorded indicated that the credit availed on the Service Tax paid on deposit insurance service is ineligible.

Accordingly, Show Cause Notice was issued proposing to disallow the wrongly availed credit and also to recover the same along with interest and also for imposing penalty. After due process of law, the Original Authority vide order impugned herein confirmed the demand, interest and imposed penalty, including a separate penalty on the Former Chief Financial Officer of Indian Overseas Bank. Aggrieved, the appellants are now before the Tribunal.

The question involved is whether the Appellant-bank can avail credit of the Service Tax on the deposit insurance service provided by DICGC.

The said issue was considered by the Larger Bench of the Tribunal in the case of South Indian Bank v. Commissioner of Customs, Central Excise and Service Tax wherein it was held that insurance service provided by DICGC to the banks is an input service and the credit of Service Tax is eligible. In the appellant’s own case, the Tribunal, for a different period, has followed the decision of the Larger Bench and held that the credit is eligible. In view of these decisions, present Tribunal held that, the credit of the Service Tax paid on the basis of premium paid to DICGC is eligible. The impugned order disallowing the credit and confirming the demand, interest and penalty is set aside. The appeals allowed.

Tags : Demand Confirmation Legality

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