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2021 (1) TMI 1023 - AT - Service TaxCENVAT Credit - Service Tax paid for the services provided by the Insurance Corporation for insuring the deposits of public with the banks - HELD THAT - This very same issue was referred to Larger Bench and vide order in the case of M/S. SOUTH INDIAN BANK VERSUS THE COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX-CALICUT 2020 (6) TMI 278 - CESTAT BANGALORE , the Larger Bench of the Tribunal had held that credit is eligible on the service tax paid on such premiums. The learned AR has relied upon the decision of CESTAT Bench at Mumbai in the case of M/S. BANK OF AMERICA VERSUS PRINCIPAL COMMISSIONER, MUMBAI EAST 2020 (11) TMI 582 - CESTAT MUMBAI . The very same issue has again been referred to the Hon ble President to resolve the issue by constituting a Larger Bench. The reason for such reference and doubting of the order rendered by the Larger Bench is that the decision rendered by the Hon ble Apex Court in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. 2018 (7) TMI 1826 - SUPREME COURT was not considered by the Larger Bench and therefore the Larger Bench decision is per incuriam. When the issue has been decided by Larger Bench, judicial discipline binds us to follow the same. Further, the judgement in Dilip Kumar Co. is with regard to interpretation of exemption notifications and would not be relevant for application to the issue under consideration which is the eligibility of Cenvat Credit. Application of judicial discipline is necessary to give uniformity and certainty decisions. The impugned order cannot sustain and requires to be set aside - Appeal allowed - decided in favor of appellant.
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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