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TMI Blog2025 (1) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... ance cover of small deposit in the event of bank failure, the tax leviable thereon under Finance Act, 1994 charged on such premium was being availed by the beneficiary banks which, in several dispute, came before the Tribunal. In the light of conflicting decisions, the matter came to be referred to Hon'ble President for constitution of Larger Bench to rule on the proper interpretation. 3. Learned Counsel for the appellant submitted that the issue is no longer res integra in view of the decision of the Larger Bench in South Indian Bank v. Commissioner of Customs, Central Excise and Service Tax, Calicut [2020 (6) TMI 278 - CESTAT BANGALORE - LB]. It was also pointed out that the decision of the Larger Bench came to be challenged before the Hon'ble High Court of Kerala in The Principal Commissioner of Central Tax & Central Excise, Cochin v. South Indian Bank [2022 (12) TMI 1479 - KERALA HIGH COURT] which held as follows '12. We have examined the view from the perspective of questions raised before us. To conclude precisely, the larger bench has taken each one of the circumstances at both the ends i.e. while availing the services and providing services, the practice/procedure an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and held that the process of issuance of the policy by the insurer and subsequent procurement of re-insurance policy from another company, which is a statutory requirement, is an integral part of the entire process and the insurance process does not come to end merely on the issuance of the insurance policy since it continues till the existence of the term of the policy. The High Court noted that since re-insurance has to be taken under Section 101A of the Insurance Act, it is a statutory obligation and, therefore, has to be considered as having nexus with the "output service" and, therefore, would be an "input service", for which Cenvat credit can be availed. The portion of the judgment of the High Court pertaining to this aspect is reproduced below : "6. Having heard the Learned Counsel for the parties and in the fact of this case, we are of the opinion that the order of the Tribunal does not require any interference. Rule 2(l) of the Cenvat Credit Rules, 2004 provides that 'Input Service' means service used by a provider of taxable service for providing an 'Output Service'. The submission of the Learned Counsel for the appellant that once the Insurance Policy is issued by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the aforesaid decision of the Karnataka High Court in PNB Metlife India has been accepted by the Central Board of Excise and Customs in the Circular dated 16 February, 2018. The relevant paragraphs 8 and 8.1 are reproduced below : "8. Decision of the Hon'ble High Court of Karnataka at Bangalore dated 9-4-2015 in the case of M/s. PNB Metiife India Insurance Company Ltd. Bangalore [2015 (39) STR 561 (Ka.)] 8.1 Department has accepted the aforementioned order of the Hon'ble High Court of Karnataka. The issue examined in the order was, whether Reinsurance is an input service which is used for providing output service, namely, insurance and whether Cenvat Credit taken on re-insurance service is admissible. Hon'ble High Court held that re-insurance is a statutory obligation and the same is co-terminus with the insurance policy. Issuance of insurance policy by insurer, and then taking of re-insurance by it, is a continuous process. Re-insurance is, therefore, an input service." 61. 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 Insur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or rendering 'output services'." 7. Thereafter, the reference to the Hon'ble President to have the matter considered by a Larger Bench was taken by a Larger Bench of the Tribunal in Bank of America, National Association v. Principal Commissioner of CGST & Central Excise, Mumbai East and by interim order no 14-18/2024 dated 30th April 2024, disposing off reference in appeal [service tax appeal no. 88202 of 2019 and others] against order [order-in-original no. 44/MVSC/PR.COMMR/MR/2019-20 dated 04th September 2019] of Commissioner of CGST & Central Excise, Mumbai East, it was held that '54. It would be seen from the aforesaid judgment of the Kerala High Court that the contentions of the department against the decision of the Larger Bench of the Tribunal were not accepted and the appeal was dismissed holding that the High Court was in full agreement with the views expressed by the Larger Bench of the Tribunal. The Kerala High Court further held that the Larger Bench of the Tribunal, for valid and correct reasons, 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 rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e do not find ourselves persuaded to accept the case of the appellant/revenue that the questions of law as framed would at all arise. The revenue is also not before us to contend that there is some issue which has not been addressed by the Division Bench of the Kerala High Court or has missed its attention on issue of law and which would be relevant in the context of the present proceedings. The revenue also is unable to urge any contention as to why the decision of the Kerala High Court accepting the decision of the Larger Bench of CESTAT ought not to be accepted. 12. In view of the above discussion, we are of the clear opinion that no substantial question of law arises in the present appeals. Both the appeals are accordingly dismissed. No costs." (emphasis supplied) 56. It is seen that the Bombay High Court not only agreed with the view taken by the Kerala High Court in approving the decision of the Larger Bench of the Tribunal in South Indian Bank, but the Bombay High Court also observed that the Revenue could not contend before the High Court that there were still some issues which had not been addressed by the Division Bench of the Kerala High Court and which would be rele ..... X X X X Extracts X X X X X X X X Extracts X X X X
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