The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the the insurance service provided by the Deposit Insurance Corporation to the banks is an “input service” and CENVAT credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the banks for rendering “output services.
The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that as per section 66D the negative list is compiled of the services stated therein and is relied on to bring the assessee within the negative list is clause-(n) i.e. services by way of extending deposits, loans. advances etc. in so far as the consideration is represented by way of interest or discount. The expression used in clause-(n) begins with the words ‘extending deposits, loans or advances’, and such activity is represented by way of interest or deposit of money. The determining word in the clause is ‘extending deposits, loans or advances etc. Extending deposits’ literally understood is the deposits, loans etc. extended by the assessee. The acceptance of deposits is a pure and simple money transaction.
But the realm in which the controversy operates is after receiving the deposits from public, the assessee is under statutory obligation to insure the deposits received for conducting the bank business and extends under law services on which service tax is paid. The services provided by the assessee are not falling within the negative list.
Therefore, there is relatability on a hostile consideration of business in banking between the services availed and services rendered.
The tribunal allowed appeal with consequential relief, if any, as per law.
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Case Details
Case Title: M/s State Bank of Patiala Versus Commissioner of Central Excise and Service Tax, Chandigarh-II
Case No.: Service Tax Appeal No. 60547 of 2016
Date: 06.01.2025
Counsel For Respondent: Aneesh Dewan
