The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed CENVAT Credit to Axis Bank on tax paid on premium mandatorily required for functioning as banks.
The bench of C J Mathew (Technical Member) and Ajay Sharma (Judicial Member) has observed that CENVAT credit is available on tax paid on premium mandatorily required for functioning as banks under the supervision of Reserve Bank of India (RBI).
M/s Axis Bank Ltd is in appeal against denial of CENVAT credit of Rs. 59,68,88,683, availed by them between June 2012 and December 2013, on tax arising on premium charged by Deposit Insurance and Credit Guarantee Corporation (DICGC), that was sought to be recovered under section 73 of Finance Act, 1974, attended upon with appropriate interest under section 75 of Finance Act, 1994, while imposing penalty of like amount under rule 14 of CENVAT Credit Rules, 2004 in order of Commissioner of Service Tax.
Following the resolution of dispute on taxability of the premium so paid by all banks under the mandate of Reserve Bank of India (RBI) on insurance cover of small deposit in the event of bank failure, the tax leviable under Finance Act, 1994 charged on premium was being availed by the beneficiary banks which, in several dispute, came before the Tribunal.
The limited issue in this appeal is eligibility for availment of CENVAT credit of tax paid on premium mandatorily required for functioning as banks under the supervision of Reserve Bank of India.
The tribunal while allowing the appeal held that 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’.
Read More: CESTAT Quashes Service Tax Demand On Amount Received As Pure Agents Or Reimbursement
Case Details
Case Title: Axis Bank Ltd Versus Commissioner of Service Tax
Case No.: Service Tax Appeal No: 87076 Of 2016
Date: 22/01/2025
Counsel For Appellant: Jay Chedha and Shri Aniket Barve
Counsel For Respondent: Priyesh Bheda
