Tirupati Urban Co-Operative Bank Ltd Vs Commissioner of Customs (CESTAT Mumbai)
The appeal was filed by M/s Tirupati Co-operative Bank Ltd., a provider of banking and other financial services, against the order upholding the confirmation of service tax demands, interest, and penalties relating to the availment of CENVAT credit for the periods 2005-06 to 2010-11. The dispute concerned the availment and retention of CENVAT credit on inputs and input services commonly used for providing both taxable and exempt services, particularly the receipt of interest in the course of rendering services that were not liable to tax. While the availment of CENVAT credit under Rule 3 of the CENVAT Credit Rules, 2004 was not disputed, the controversy related to its continued retention and utilization under Rule 6 of the Rules.
Two show-cause notices were adjudicated together. During the relevant period, Rule 6 of the CENVAT Credit Rules, 2004 underwent changes. Before 1 April 2008, providers not maintaining separate accounts for taxable and exempt services were required either to reverse the credit attributable to exempt services or pay a prescribed percentage of the value of exempt services. After 1 April 2008, the compliance provisions were modified. According to the tax authorities, interest and discounts relating to cash credit, overdraft and bill discounting facilities were exempt under Notification No. 29/2004-ST, and therefore credit attributable to such exempt services could not be retained.
