Appellants granted Cenvat Credit for Service Tax on insuring public deposits

The Tribunal ruled in favor of the appellants, allowing them to avail Cenvat Credit for the Service Tax paid on insuring public deposits with banks. The decision was based on the precedent set by the Larger Bench, emphasizing the significance of input services provided by DICGC to banks and the need for consistency in judicial decisions.

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Issues:
Whether appellants are eligible for Cenvat Credit of Service Tax paid for insuring public deposits with banks.

Analysis:
The issue at hand is whether the appellants can avail Cenvat Credit of Service Tax paid for insuring public deposits with banks. The appellant's counsel argued that a Larger Bench decision in a previous case supported their eligibility for credit based on services rendered by the Deposit Insurance Corporation (DICGC) being input services for banks. The Division Bench in ICICI Bank Ltd. Vs. CCE & ST-Mumbai also supported this view. However, the department argued against this, citing a different decision in the case of M/s. Bank of America, where the issue was referred to a Larger Bench due to perceived inconsistencies with a Supreme Court judgment. The department contended that the decision in M/s. South Indian Bank was per incuriam and not applicable.

The Tribunal considered both arguments and referred to the decision of the Larger Bench in M/s. South Indian Bank, which held that credit is indeed eligible on the service tax paid on premiums for insuring public deposits. The Tribunal emphasized that the services provided by DICGC to banks constituted input services under the definition, crucial for the banks to function and provide banking services. The Tribunal rejected the department's argument that the activity of accepting deposits falls under the negative list of services, clarifying the distinction between accepting and extending deposits. The Tribunal upheld the decision of the Larger Bench, emphasizing the importance of judicial discipline in following precedents. Consequently, the Tribunal allowed the appeals, providing consequential reliefs to the appellants.

In conclusion, the Tribunal ruled in favor of the appellants, allowing them to avail Cenvat Credit for the Service Tax paid on insuring public deposits with banks. The decision was based on the precedent set by the Larger Bench, emphasizing the significance of input services provided by DICGC to banks and the need for consistency in judicial decisions.

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