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TMI Blog2024 (12) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bank of India. Which means without payment of insurance premium to DICGC, the Bank will not be able to function or provide any banking and other financial services. Therefore payment of insurance premium to DICGC is an integral part of banking and other financial services and is an input service for which Cenvat Credit can be availed by the banks. The impugned orders are set aside - the appeals filed by the Appellant are allowed. - HON'BLE MR. AJAY SHARMA , MEMBER ( JUDICIAL ) And HON'BLE MR. ANIL. G. SHAKKARWAR , MEMBER ( TECHNICAL ) For the Appellant : Shri Rajeev Dinkar Waglay , Advocate For the Respondent : Shri Badhe Piyush Barasu , AR ORDER PER : AJAY SHARMA These appeals have been filed by the appellant challenging the impugned Orders-in-Appeal dated 25.03.2018 rejecting the appeals filed therein and confirming the demand for inadmissible cenvat credit availed by the appellant to the tune of Rs.20,87,050/- [for the period of May,2014 to June,2015] and Rs.8,75,425/-/-[for the period 2015-16] respectively alongwilth interest under section 75 of Finance Act, 1994 and penalty u/s 76 ibid r/w Rule 15 (1) of Cenvat Credit Rules, 2004. The impugned order is common in bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the appellant for this service received by the appellant from the Deposit Insurance Corporation can be availed by the appellant for rendering output services . 6. After the Interim Order of the Larger Bench, the appellant has filed instant Early Hearing applications in both the appeals. In our view, since the issues referred to the Larger Bench have already been answered by the said Bench, therefore we allow these early hearing applications and with the consent of both sides, we are taking up the appeals for hearing. 7. We have heard learned Counsel appearing for the appellant and learned Authorised Representative appearing on behalf of Revenue and perused the case records including the written submissions alongwith the case laws produced before us. 8. Learned Counsel for the appellant submits that the Larger Bench has answered the issue about admissibility of cenvat credit of service tax for the insurance service received by the appellant from DICGC in favour of the appellant, therefore, in the light of the Interim Order of the Larger Bench, the appeals filed by the Appellant may be allowed. 9. We have gone through the Interim Order of the Larger Bench and it will not be out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... represented by way of interest or discount. The issue is whether extending deposits would mean the activity of accepting deposits. The activity of accepting deposits would be an activity where the banks receive deposits from the customers in the form of savings account, 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, the banks receive interest from other banks. It is for this reason that inter-bank deposits are not included in the returns filed by the banks with the Deposit Insurance Corporation for cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services received by it. This CENVAT credit was denied by the Department for the reason that re-insurance service cannot be considered as an input service since it takes place after the insurance policy is issued. The Karnataka High Court examined whether CENVAT credit availed and utilized by the insurance company on service tax paid for re-insurance service is an input service for the output service of insurance that the company was providing and held that the process of issuance of the policy by the insurer and subsequent procurement of reinsurance policy from another company, which is a statutory requirement, is an integral part of the entire process and the insurance process does not come to end merely on the issuance of the insurance policy since it continues till the existence of term of policy. The High Court noted that since re-issuance has to be taken under section 101A of the Insurance Act, it is a statutory obligation and, therefore, has to be considered as having nexus with the output service and, therefore would be an input service , for which Cenvat credit can be availed. ****** 60. It needs to be noted that the aforesaid decision of the Karnataka High Court in PNB M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Division Bench of the Tribunal in the Appeal filed by Yes Bank as also the order dated 29.09.2020 passed by the Division Bench of the Tribunal in the appeal filed by Indusind Bank were challenged before the Bombay High Court. In the impugned orders before the Bombay High Court, the Division Bench of the Tribunal had relied upon the decision of the Larger Bench of the Tribunal in South Indian Bank. The Bombay High Court dismissed the appeals filed by the department holding that the High Court was in agreement with the views expressed by the Kerala High Court .. 13. It is seen that the Bombay High Court not only agreed with the view taken by the Kerala High Court in approving the decision of the Larger Bench of the Tribunal in South Indian Bank, but the Bombay High Court also observed that the Revenue could not contend before the High Court that there were still some issues which had not been addressed by the Division Bench of the Kerala High Court and which would be relevant. The Bombay High Court also observed that the Revenue was also not able to urge any contention to substantiate why the decision of the Kerala High Court in accepting the decision of the Larger Bench of the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the Tribunal and that the Revenue is unable to urge any contention as to why the decision of Hon ble Kerala High Court accepting the decision of the Larger Bench of the Tribunal ought not to be accepted. 12. The view taken by the Larger Bench in the matter of South Indian Bank Ltd. (supra) has further been affirmed by another Larger Bench of the Tribunal in the matter of Bank of America, National Association vs. Principal Commissioner, CGST Central Excise, Mumbai ; 2024 (4) TMI 1149-CESTAT MUMBAI. 13. In the light of discussions made hereinabove, we are of the view that the registration of the banks with DICGC is not optional but compulsory. All Banks have to obtain a licence from Reserve Bank of India u/s 22 of the Banking Regulation Act without which no bank can function and all of them have also to compulsorily obtain registration with the DICGC in order to protect the interest of depositors. The registration can be obtained by the banks only on payment of insurance premium to DICGC. If a Bank fails to pay premium to DICGC, its registration would be cancelled, which ultimately would result in cancellation of licence granted to the Bank by Reserve Bank of India. Which means ..... X X X X Extracts X X X X X X X X Extracts X X X X
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