The Customs, Excises, Service Taxes Appellate Tribunal (CESTAT), Bangalore Bench held that the CENVAT credit of service tax paid for insurance service received from the Deposit Insurance and Credit Guarantee Corporation (DICGC) can be availed by banks for rendering “output services”.
The issue involved in all these appeals filed is whether the assessee banks are eligible for cenvat credit of service tax availed on insurance service received by the banks from the Deposit Insurance and Credit Guarantee Corporation.
Initially there was a Difference of Opinion between two Benches of the Tribunal regarding the fact as to whether the insurance service rendered by the Deposit Insurance and Credit Guarantee Corporation is covered by the definition of “Input Service” or not.
In order to resolve the said issue, a reference was made to the Larger Bench of the Tribunal by holding that insurance service provided by Deposit Insurance and Credit Guarantee Corporation to the banks is an “input service” and cenvat credit of service tax paid for this service received by the banks from the Deposit Insurance and Credit Guarantee Corporation can be availed by the banks for rendering output service.
After the decision of the Larger Bench, these appeals have been listed before this Bench for final disposal.
It is pertinent to note that where the cenvat credit on insurance service is denied to the banks, the banks are in appeal and where the Department has dropped the demand of service tax, interest or penalty, the Department is in appeal.
The two member bench of S.S. Garg and P. Anjani Kumar ruled that the insurance service provided by the Deposit Insurance Corporation to the banks is an “input service” and CENVAT credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the banks for rendering “output services”.
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