2021 (1) TMI 754

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.....  On behalf of the appellants, the learned Counsel Shri Ragavan Ramabhadran appeared and argued the matter. He submitted that the issue has been covered by the Larger Bench decision in the case of M/s. South Indian Bank Vs. CCE & ST-Calicut-2020-TIOL-861-CESTAT-BANG-LB. It is submitted by him that later a Division Bench of this Tribunal in ICICI Bank Ltd. Vs. CCE & ST-Mumbai, vide order dated 12.02.2019 had followed the said decision and held that the assessee would be eligible for credit, since the services rendered by DICGC are input services for banks.  However, that later in the case of M/s. Bank of America Vs. CCE, Mumbai-2020 (11) TMI 582 CESTAT MUMBAI, the very same issue was referred to the Hon'ble President to constitute....

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....dit is eligible on the service tax paid on such premiums.  The relevant portion is reproduced as under:- "51. Premium is paid by the banks to the Deposit Insurance Corporation for providing the insurance service for which the banks pay service tax. It is this service tax paid by the banks on the insurance service received by the banks from the Deposit Insurance Corporation that is the bone of contention between the parties.  52.  It is not in dispute that after accepting the deposits there are number of services on which the banks have to pay service tax under "banking and other financial services". These services are in connection with both the "accepting" of deposits and "lending" activity of the banks. Ba....

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....ccount, recurring deposits, for which the banks pay interest to the customers. On the other hand, the extending of deposits would be an activity of a bank giving its surplus money in the form of deposit to another person, where the consideration received would be in the form of interest. This would be a case where in the course of banking activities, one bank makes a deposit with another bank for which it receives consideration in the form of interest. It is this consideration received by the banks in the form of interest which has been specified under section 66D (n) of the Finance Act in the negative list of services. Thus, in case of accepting deposits, the banks have to pay interest to the customers, whereas while extending deposits, th....