Appeal Allowed: CESTAT Mumbai Order Overturned; Case Remanded for Reconsideration on Bank Credit for Service Tax.

The appeal under Sec. 35-G of the Central Excise Act, 1944, was allowed, setting aside the CESTAT Mumbai order dated 12.02.2019. The case was remanded to CESTAT for reconsideration, aligning with the larger bench's judgment that banks can avail credit for service tax paid to the Deposit Insurance Corporation. No costs were ordered.

---

---

Issues involved:
Appeal under section 35-G of the Central Excise Act, 1944 against the order passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (CESTAT) in Appeal No.ST/86237/2015. The issue involves whether banks can avail credit of service tax paid for the service provided by the Deposit Insurance Corporation.

Analysis:

1. Appeal under section 35-G of the Central Excise Act, 1944:
The appeal was preferred against the order dated 12.02.2019 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (CESTAT) in Appeal No.ST/86237/2015. The issue involved in this appeal is identical to the one in Central Excise Appeal No.148 of 2019 and other connected appeals which were disposed of on 22.09.2020.

2. Availing credit of service tax paid for services by Deposit Insurance Corporation:
The larger bench of CESTAT, Bangalore had delivered a judgment on 20.03.2020 regarding the service provided by the Deposit Insurance and Credit Guarantee Corporation to banks for insuring deposits. The issue was whether banks can avail credit of the service tax paid for this service. Divergent views were expressed by different benches of CESTAT, with a Division Bench in Delhi holding that banks can avail such credit, while CESTAT in Mumbai disallowed it. The larger bench held that the view taken in favor of banks availing credit is correct, and the contrary view is not acceptable. Consequently, the impugned order dated 12.02.2019 was set aside, and all appeals were remanded back to CESTAT for a fresh decision in line with the larger bench's judgment.

3. Decision and Conclusion:
In view of the decision rendered by the larger bench of CESTAT, the impugned order dated 12.02.2019 was set aside and quashed. The appeal was remanded back to CESTAT for a fresh decision in conformity with the judgment of the larger bench. The appeal was accordingly allowed, with no order as to costs. The order would be digitally signed by the Private Secretary of the Court for further action by all concerned upon production of a digitally signed copy of the order via fax or email.

---