Deposit Insurance and Credit Guarantee Corporation Vs Commissioner (CESTAT Mumbai)
CESTAT Mumbai held that the deposit insurance activity of Deposit Insurance and Credit Guarantee Corporation, Mumbai (DICGC) falls within the ambit of section 65(105)(d) of the Finance Act, 1994 and is chargeable to Service Tax under “General Insurance Business”.
Facts- The assessee (M/s. Deposit Insurance and Credit Guarantee Corporation i.e DICGC) is a subsidiary of the Reserve Bank of India (RBI), which was established under the Deposit Insurance Credit Guarantee Corporation of India Act, 1961 for the purpose of ensuring the safety of deposits held in commercial banks, cooperative banks, Regional Rural Banks etc., by providing insurance of deposits and guaranteeing credit facilities.
DICGC insures all bank deposits, savings, fixed, current and recurring deposits up to the prescribed limit per deposit in a bank. DICGC pay service tax on the premium collected from the insured banks for insuring such deposits. For this purpose, DICGC is registered with the jurisdictional Service Tax Commissionerate vide registration No. AAACD2094ESD001, under the category of ‘general insurance business’ service u/s. 69 of the Finance Act, 1994.
The assessee after taking service tax registration on 28.03.2012 filed their first ST-3 return online on 25.04.2012 for the period from October 2011 to March 2012. It was found that DICGC had failed to pay appropriate service tax and also failed to pay interest on delayed payment of service tax resulting in the issuance of show cause notice proceedings.
Conclusion- On examination of the provisions of the DICGC Act, 1961, it was clarified by the CBIC vide letter No.354/164/2008-TRU dated 24.02.2009 that DICGC is not taxable under the taxable service of ‘general insurance business’; this view was reiterated by CBIC letter dated 22.04.2009. However, after the re-examination of all the relevant issues, the CBIC by letter dated 20.09.2011 clarified that the deposit insurance activity of DICGC falls within the ambit of section 65(105)(d) of the Finance Act, 1994 and is chargeable to Service Tax under “General Insurance Business”.
Held that appellants DICGC are liable to pay interest therein, in case there is any delay in payment of service tax by the due date as prescribed in the service tax legislation. Thus we find that the appellants DICGC are required to pay service tax on the taxable service of deposit insurance with effect from 20.09.2011.
FULL TEXT OF THE CESTAT MUMBAI ORDER
This appeal has been filed under Section 86 of the Finance Act, 1994 (for short, ‘the said Act’), by M/s. Deposit Insurance and Credit Guarantee Corporation, Mumbai (DICGC), having been aggrieved by the Order-in-Appeal No.SK/128-134/LTU/MUM/2015 dated 11.01.2016 (herein referred to as ‘impugned order’) passed by the Commissioner of Central Excise (Appeals), 29th Floor, World Trade Centre, Cuff Parade, Mumbai – 400005, Large Tax Payer Unit (LTU), Mumbai as first appellate authority.
2. For the sake of convenience, the appellant M/s. Deposit Insurance and Credit Guarantee Corporation, Mumbai (DICGC), herein shall be referred to as the ‘assessee’ and the respondent Commissioner of Central Excise & Service Tax, Large Tax Payer Unit (LTU), Mumbai herein shall be referred as the “Revenue / department”.
FACTUAL MATRIX:
3.1. The assessee is a subsidiary of Reserve Bank of India (RBI), which was established under the Deposit Insurance Credit Guarantee Corporation of India Act, 1961 for the purpose of ensuring safety of deposits held in commercial banks, cooperative banks, Regional Rural Banks etc., by providing insurance of deposits and guaranteeing credit facilities. DICGC insures all bank deposits, savings, fixed, current and recurring deposits up to the prescribed limit per deposit in a bank. DICGC pay service tax on premium collected from the insured banks for insuring such deposits. For this purpose, DICGC is registered with jurisdictional Service Tax Commissionerate vide registration No. AAACD2094ESD001, under the category of ‘general insurance business’ service under section 69 of the Finance Act, 1994. They are also holders of LTU membership vide No. LTU/MUM/0113.
3.2. The assessee after taking service tax registration on 28.03.2012 filed their first ST-3 return online on 25.04.2012 for the period from October, 2011 to March, 2012. During the scrutiny of ST-3 returns by the Revenue, it was found that DICGC had failed to pay appropriate service tax and also failed to pay interest on delayed payment of service tax resulting in issuance of show cause notice proceedings. Upon confirmation of adjudged demands in the said show cause notice proceedings by original adjudication authorities, the assessee being aggrieved had preferred to file appeals before the Commissioner of Central Excise (Appeals), LTU, Mumbai. Further in respect of refund claims filed by the assessee which were rejected/ sanctioned and appropriated against certain demands, by the original authority, appeals were also preferred by the assessee. Revenue also filed two appeals before the said Commissioner of Central Excise (Appeals), LTU, Mumbai claiming that insurance premium collected is not inclusive of service tax and for recovery of short payment of service tax. In respect of all such five appeals filed by the assessee and two appeals filed by the department, the said Commissioner of Central Excise (Appeals), LTU, Mumbai had passed a common order vide Order-in-Appeal SK/128-134/LTU/MUM/2015 dated 11.01.2016 (impugned order). As the issues in appeal are having reference to various orders in original passed by original authority and are covered under the common order in appeal, these details have been captured in brief as below, for better appreciation of the facts of the case.
Table – 1
Issues in brief which were handled in impugned order, the common Order in Appeal passed No.SK/128-134/LTU/MUM/2015 dated 11.01.2016
