By TIOL News Service

MUMBAI, AUG 09, 2017: AGAINST the order passed by the Commissioner of Service Tax, Mumbai, the appellant is before the CESTAT.

The Appellant is a bank. To protect the deposits made by the customers, the bank is insuring the same.

The service tax paid in respect of the Insurance Premium is availed as CENVAT credit.

The appellant submits that such insurance being integrally connected with the business, the credit is admissible.

The jurisdictional authorities didn't agree with this plea of the appellant and, therefore, denied the CENVAT credit.

After hearing both sides, the Bench observed -

"4. The contention of the appellant has force since no banker will prefer to take risks against financial services provided. There is certain amount of risk against lending which is made out of deposits received from depositors. Therefore, taking insurance to protect interest of the bank being integrally connected with the business of banking, CENVAT credit of service tax paid claimed is allowable…"

The appeal was allowed.

(See 2017-TIOL-2849-CESTAT-MUM)