2018 (3) TMI 1248 - AT - Service Tax

CENVAT credit - insurance of deposits - input services - duty paying documents - denial on the ground that insurance of deposits is not an input service for them and they have not produced the relevant documents in terms of Rule 9 (2) of Cenvat Credit Rules, 2004 - Held that - taking insurance to protect interest of the bank being integrally connected with the business of banking, Cenvat credit of service tax paid claimed is allowable - credit allowed. Non-production of relevant documents showing name, address, registration number of the service provider - Held that - said documents have been produced by the appellant before the authorities below but they have not been considered - these are proper documents against which the appellant has taken the cenvat credit which are found to be correct. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of cenvat credit on insurance of deposits as input service.
2. Requirement of producing relevant documents for availing cenvat credit.

Analysis:

Issue 1: Denial of cenvat credit on insurance of deposits as input service
The appellant, a banking company engaged in banking and financial services, appealed against the denial of cenvat credit on insurance of deposits. The impugned order rejected the credit, stating that insurance of deposits was not an input service for the appellant, and relevant documents under Rule 9(2) of Cenvat Credit Rules, 2004 were not provided. The appellant argued that insurance of deposits was essential to secure retained money, mandated by DICGC, and they paid service tax on it. They relied on a precedent and claimed to have produced all necessary documents, including the service provider's details. The AR supported the impugned order, emphasizing the absence of registration details in the appellant's documents.

Issue 2: Requirement of producing relevant documents for availing cenvat credit
The Tribunal analyzed the situation and cited a previous case involving DCB Bank Ltd., where cenvat credit was allowed on insurance of deposits due to the integral connection between banking business and risk protection. Consequently, the Tribunal ruled in favor of the appellant, permitting cenvat credit on insurance of deposits. Addressing the issue of document production, the Tribunal found that the appellant had indeed submitted documents containing the service provider's name, address, and registration number, contrary to the AR's claim. Upon reviewing these documents, the Tribunal concluded that the appellant had correctly availed the cenvat credit, overturning the impugned order and allowing the appeal with consequential relief.

This judgment clarifies the eligibility of banking companies to claim cenvat credit on insurance of deposits as an input service and underscores the importance of producing proper documents, including service provider details, to support such claims.