Relief to ICICI: Banks can avail CENVAT Credit of Service Tax paid on Insurance Service received from Deposit Insurance Corporation, says Bombay High Court [Read Order]

Relief to ICICI: Banks can avail CENVAT Credit of Service Tax paid on Insurance Service received from Deposit Insurance Corporation, says Bombay High Court [Read Order]

CESTAT - ICICI Banks - CENVAT Credit - Service Tax - Insurance Service - Deposit Insurance Corporation - Bombay High Court - Taxscan

The Bombay High Court held that the banks can avail CENVAT credit of service tax paid on insurance service received from Deposit Insurance Corporation.

The ICICI Bank has filed a petition wherein the answer is sought on the issue whether the banks can avail credit of this service tax paid by the banks for the service provided by the Deposit Insurance Corporation.

The service provided by the Deposit Insurance and Credit Guarantee Corporation to the banks for insuring the deposits of the public with the banks has been considered by the banks to be an input service and CENVAT credit for service tax paid by the banks for this service has been availed of by the banks for rendering output service.

Earlier, the Division Bench of CESTAT at Delhi in the appeal filed by State Bank of Bikaner and Jaipur had held that the banks can avail such credit of service tax.

On the other hand, it was noted that CESTAT at Mumbai in ICICI Bank Limited had disclosed such credit.

Since divergent views were expressed by division benches of CESTAT, the matter was referred to the larger bench wherein it was held that the view taken in State Bank of Bikaner and Jaipur is the correct view and the contrary view taken in ICICI Bank Limited is not acceptable.

“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’, ” the larger bench said.

Therefore, the division bench of Justice Abhay Ahuja and Justice Sanjeev Narula in view of the aforesaid, set aside impugned order and remanded the Appeal back to the CESTAT for fresh decision in conformity with the decision rendered by the Larger Bench.

Subscribe Taxscan AdFree to view the Judgment

Related Stories

Related Stories

Taxscan Subscription @ Rs.299/ year
Taxscan Subscription
@ Rs.299/ year