High Court sets aside order, remands case to CESTAT on service tax credit issue.

The High Court allowed the appeal, setting aside the impugned order dated 12.02.2019 and remanding the case back to CESTAT for a fresh decision consistent with the judgment of the larger bench regarding banks availing credit of service tax paid to the Deposit Insurance and Credit Guarantee Corporation. No costs were awarded in this matter.

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Issues involved: Appeal under section 35G of the Central Excise Act, 1944 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/86297/2015. Identical issue as in Central Excise Appeal No. 148 of 2019 and other connected appeals disposed off on 22.09.2020.

Analysis:
The appeal before the High Court pertained to a decision of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Appeal No. ST/86297/2015. The issue in this appeal was found to be identical to a previous decision in Central Excise Appeal No. 148 of 2019 and other connected appeals that were resolved on 22.09.2020. The appellant's counsel argued that the present appeal was inadvertently not listed with the previous appeals and requested that it be disposed of in line with the order dated 22.09.2020. The respondent had no objection to this request.

The High Court referred to a previous judgment by a three-member bench of CESTAT, Bangalore, dated 20.03.2020, which addressed the issue of whether banks could avail credit of service tax paid to the Deposit Insurance and Credit Guarantee Corporation for insuring public deposits. Divergent views were noted from different CESTAT benches, with one in Delhi allowing such credit and another in Mumbai disallowing it. The matter was then referred to a larger bench, which held that the credit could be availed by banks for rendering output services. Consequently, the impugned order dated 12.02.2019 was set aside and quashed, with all appeals remanded back to CESTAT for a fresh decision in line with the larger bench's ruling.

In light of the above, the High Court allowed the appeal, setting aside the impugned order and remanding the case back to CESTAT for a fresh decision consistent with the judgment of the larger bench. The court made it clear that there would be no order as to costs in this matter.

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