South Indian Bank Vs C.C., C.E. & S.T-Calicut (CESTAT Bangalore)
The issue under consideration is whether the assessee banks are eligible for cenvat credit of service tax availed on insurance service received by the banks from the Deposit Insurance and Credit Guarantee Corporation?
CESTAT states that, in the present appeals also, in order to render any output service under the category of “banking and other financial services”, it is necessary for a bank to register itself with the Deposit Insurance Corporation and pay premium after registration. A bank, without obtaining registration and without payment of insurance premium on the deposits outstanding, cannot render any “output service” of “banking and other financial service”. A reference was made to the Larger Bench of the Tribunal by holding that insurance service provided by Deposit Insurance and Credit Guarantee 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 and Credit Guarantee Corporation can be availed by the banks for rendering output service. Therefore, 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”.
