Karnataka High Court
Commissioner Of Central Excise And ... vs M/S Corporation Bank on 23 April, 2026
Author: S.G.Pandit
Bench: S.G.Pandit
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NC: 2026:KHC:22182-DB
CEA No. 9 of 2022
C/W CEA No. 2 of 2022
CEA No. 3 of 2022
HC-KAR AND 5 OTHERS
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 23RD DAY OF APRIL, 2026
PRESENT
THE HON'BLE MR. JUSTICE S.G.PANDIT
AND
THE HON'BLE MR. JUSTICE K. V. ARAVIND
CENTRAL EXCISE APPEAL No.9 OF 2022
C/W
CENTRAL EXCISE APPEAL No.2 OF 2022
CENTRAL EXCISE APPEAL No.3 OF 2022
CENTRAL EXCISE APPEAL No.7 OF 2022
CENTRAL EXCISE APPEAL No.8 OF 2022
CENTRAL EXCISE APPEAL No.10 OF 2022
CENTRAL EXCISE APPEAL No.11 OF 2022
CENTRAL EXCISE APPEAL No.12 OF 2022
IN CEA No.9/2022
Digitally BETWEEN:
signed by
VINUTHA B S
Location: High 1. COMMISSIONER OF CENTRAL EXCISE
Court of AND SERVICE TAX,
Karnataka
7TH FLOOR, TRADE CENTRE,
BUNTS' HOSTEL ROAD,
MANGALORE-575003.
...APPELLANT
(BY SRI ARAVIND V CHAVAN, ADVOCATE)
AND:
1. M/S CORPORATION BANK,
CORPORATE OFFICE/HEAD OFFICE,
MANGALA DEVI TEMPLE ROAD,
-2-
NC: 2026:KHC:22182-DB
CEA No. 9 of 2022
C/W CEA No. 2 of 2022
CEA No. 3 of 2022
HC-KAR AND 5 OTHERS
PANDESHWAR,
MANGALORE-575001.
...RESPONDENT
(BY SRI G. SHIVADAS, SENIOR COUNSEL FOR
SMT. TANMAYEE RAJKUMAR, ADVOCATE)
THIS CEA / CENTRAL EXCISE APPEAL UNDER SECTION
35G OF THE CENTRAL EXCISE ACT, PRAYING TO ANSWER THE
SUBSTANTIAL QUESTIONS OF LAW FRAMED ABOVE IN FAVOUR
OF THE APPELLANT IN THE INTEREST OF JUSTICE AND
EQUITY. SET ASIDE THE IMPUGNED FINAL ORDER
No.A/20704/2020 DATED 23/09/2020 PASSED IN
ST/20423/2017 (IN COMMON FINAL ORDER No.20691-
20708/2020) BY THE HON'BLE CESTAT, SOUTH ZONAL BENCH,
BENGALURU, VIDE ANNEXURE-A, IN THE INTEREST OF
JUSTICE AND EQUITY ETC.
IN CEA No.2/2022
BETWEEN:
1. THE PRINCIPAL COMMISSIONER OF
CENTRAL TAX - GST,
BANGALORE NORTH COMMISSIONERATE,
No.59, GROUND FLOOR,
HMT BHAVAN, GANGA NAGAR,
BANGALORE-560032.
...APPELLANT
(BY SRI NEERALGI JEEVANBABU JAGADISH, ADVOCATE)
AND:
1. M/S STATE BANK OF MYSORE,
(REFERRED AS SBM/ASSESSEE),
HEAD OFFICE: MYSORE BANK CIRCLE,
KEMPEGOWDA ROAD,
BANGALORE 560009.
...RESPONDENT
(BY SRI G. SHIVADAS, SENIOR COUNSEL FOR
SMT. TANMAYEE RAJKUMAR, ADVOCATE)
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NC: 2026:KHC:22182-DB
CEA No. 9 of 2022
C/W CEA No. 2 of 2022
CEA No. 3 of 2022
HC-KAR AND 5 OTHERS
THIS CEA / CENTRAL EXCISE APPEAL UNDER SECTION
35G OF THE CENTRAL EXCISE ACT, ARISING OUT OF ORDER
DATED 23/09/2020 PASSED IN FINAL ORDER No.20708/2020.
PRAYING TO ALLOW THE APPEAL OF THE APPELLATE AND
DECIDE THE QUESTIONS OF LAW AS FRAMED ABOVE.B. SET
ASIDE THE IMPUGNED FINAL ORDER BEARING No.
20708/2020 DATED 23/09/2020 PASSED BY THE CESTAT,
SOUTH ZONAL BENCH, BENGALURU.
IN CEA No.3/2022
BETWEEN:
1. THE PRINCIAL COMMISSIONER OF
CENTRAL TAX - GST,
BANGALORE NORTH COMMISSIONERATE,
No.59, GROUND FLOOR,
HMT BHAVAN, GANGA NAGAR,
BANGALORE-560032.
...APPELLANT
(BY SRI NEERALGI JEEVANBABU JAGADISH, ADVOCATE)
AND:
1. M/S BANK OF BARODA,
(FORMERLY VIJAYA BANK),
(REFERRED AS BOB/ASSESSEE),
HEAD OFFICE:
41/2, MG ROAD,
BANGALORE 560001.
...RESPONDENT
(BY SRI G. SHIVADAS, SENIOR COUNSEL FOR
SMT. TANMAYEE RAJKUMAR, ADVOCATE)
THIS CEA / CENTRAL EXCISE APPEAL UNDER SECTION
35G OF THE CENTRAL EXCISE ACT, ARISING OUT OF ORDER
DATED 23/09/2020 PASSED IN FINAL ORDER No.A/20692 AND
20696/2020. PRAYING TO ALLOW THE APPEAL OF THE
APPELLANT AND DECIDE THE QUESTIONS OF LAW AS FRAMED
ABOVE. SET ASIDE THE IMPUGNED FINAL ORDER BEARING
No.A/20692 AND 20696/2020 DATED 23/09/2020 PASSED BY
THE CESTAT, SOUTH ZONAL BENCH, BENGALURU .
-4-
NC: 2026:KHC:22182-DB
CEA No. 9 of 2022
C/W CEA No. 2 of 2022
CEA No. 3 of 2022
HC-KAR AND 5 OTHERS
IN CEA No.7/2022
BETWEEN:
1. PRINCIPAL COMMISSIONER OF CENTRAL
EXCISE AND SERVICE TAX,
JSS TOWERS, 100 FEET RING ROAD,
BANASHANKARI III STAGE,
BANGALORE-560 085.
2. CHIEF COMMISSIONER OF CENTRAL EXCISE
AND SERVICE TAX,
JSS TOWERS, 100 FEET RING ROAD,
BANASHANKARI III STAGE,
BANGALORE-560 085.
3. COMMISSINER OF CENTRAL TAX
C.R. BUILDING, QUEENS ROAD,
BENGALURU SOUTH COMMISSIONERATE,
BANGALORE-560 001.
...APPELLANTS
(BY SRI NEERALGI JEEVANBABU JAGADISH, ADVOCATE)
AND:
1. M/S. CANARA BANK,
No.51, BGSE TOWERS,
1ST CROSS, J.C. ROAD,
WILSON GARDEN,
BANGALORE-560 027.
...RESPONDENT
(BY SRI G. SHIVADAS, SENIOR COUNSEL FOR
SMT. TANMAYEE RAJKUMAR, ADVOCATE)
THIS CEA / CENTRAL EXCISE APPEAL UNDER SECTION
35G OF THE CENTRAL EXCISE ACT, PRAYING TO ANSWER THE
SUBSTANTIAL QUESTIONS OF LAW FRAMED ABOVE IN
FAVOUR OF THE APPELLANTS IN THE INTEREST OF JUSTICE
AND EQUITY. SET ASIDE THE IMPUGNED FINAL ORDER No.
A/20692, 20696, 20706 & 20707/2020 (ARISING OUT OF
COMMON ORDER No.A20691-20708/2020 DATED 23/09/2020
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NC: 2026:KHC:22182-DB
CEA No. 9 of 2022
C/W CEA No. 2 of 2022
CEA No. 3 of 2022
HC-KAR AND 5 OTHERS
IN ST/22135/2015, ST/21795/2016, ST/21030/2019 AND
ST/21031/2019 PASSED BY THE CESTAT, SOUTH ZONAL
BENCH, BENGALURU.
IN CEA No.8/2022
BETWEEN:
1. COMMISSIONER OF CENTRAL EXCISE
AND SERVICE TAX,
7TH FLOOR, TRADE CENTRE,
BUNTS HOSTEL ROAD,
MANGALORE 575003.
...APPELLANT
(BY SRI ARVIND V. CHAVAN, ADVOCATE)
AND:
1. M/S CORPORATION BANK,
CORPORATE OFFICE/HEAD OFFICE,
MANGALA DEVI TEMPLE ROAD,
PANDESHWAR, MANGALORE 575001.
...RESPONDENT
(BY SRI G. SHIVADAS, SENIOR COUNSEL FOR
SMT. TANMAYEE RAJKUMAR, ADVOCATE)
THIS CEA / CENTRAL EXCISE APPEAL UNDER SECTION
35G OF THE CENTRAL EXCISE ACT, ARISING OUT OF ORDER
DATED 23/09/2020 PASSED IN FINAL ORDER No.
A/20699/2020 PASSED IN ST/20152/2017 (IN COMMON FINAL
ORDER No. 20691-20708/2020) PRAYING TO ANSWER THE
SUBSTANTIAL QUESTIONS OF LAW FRAMED ABOVE IN
FAVOUR OF THE APPELLANT IN THE INTEREST OF JUSTICE
AND EQUITY. SET ASIDE THE IMPUGNED FINAL ORDER No.
A/20699/2020 DATED 23/09/2020 PASSED IN ST/20152/2017
(IN COMMON FINAL ORDER No.20691-20708/2020) BY THE
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NC: 2026:KHC:22182-DB
CEA No. 9 of 2022
C/W CEA No. 2 of 2022
CEA No. 3 of 2022
HC-KAR AND 5 OTHERS
HON'BLE CESTAT, SOUTH ZONAL BENCH, BENGALURU, VIDE
ANNEXURE-A.
IN CEA No.10/2022
BETWEEN:
1. COMMISSIONER OF CENTRAL EXCISE
AND CENTRAL TAX,
7TH FLOOR, TRADE CENTRE,
BUNTS HOSTEL ROAD,
MANGALORE-575003.
...APPELLANT
(BY SRI ARVIND V. CHAVAN, ADVOCATE)
AND:
1. M/S SYNDICATE BANK,
CORPORATE OFFICE, AUDIT AND TAX CELL,
II CROSS, GANDHINAGAR,
BENGALURU - 560 009.
...RESPONDENT
(BY SRI G. SHIVADAS, SENIOR COUNSEL FOR
SMT. TANMAYEE RAJKUMAR, ADVOCATE)
THIS CEA / CENTRAL EXCISE APPEAL UNDER SECTION
35G OF THE CENTRAL EXCISE ACT, PRAYING TO ANSWER THE
SUBSTANTIAL QUESTIONS OF LAW FRAMED ABOVE IN
FAVOUR OF THE APPELLANT IN THE INTEREST OF JUSTICE
AND EQUITY. SET ASIDE THE IMPUGNED FINAL ORDER
No.A/20702/2020 DATED 23/09/2020 PASSED IN
ST/20263/2017 (IN COMMON FINAL ORDER No.20691-
20708/2020) BY THE HON'BLE CESTAT, SOUTH ZONAL BENCH,
BENGALURU, VIDE ANNEXURE-A, IN THE INTEREST OF
JUSTICE AND EQUITY.
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NC: 2026:KHC:22182-DB
CEA No. 9 of 2022
C/W CEA No. 2 of 2022
CEA No. 3 of 2022
HC-KAR AND 5 OTHERS
IN CEA No.11/2022
BETWEEN:
1. COMMISSIONER OF CENTRAL EXCISE
AND CENTRAL TAX,
7TH FLOOR, TRADE CENTRE,
BUNTS HOSTEL ROAD,
MANGALORE-575003.
...APPELLANT
(BY SRI ARVIND V. CHAVAN, ADVOCATE)
AND:
1. M/S KARNATAKA BANK LTD.,
MAHAVEERA CIRCLE,
PUMPWELL, KANKANADY,
MANGALORE-575002.
...RESPONDENT
(BY SRI G. SHIVADAS, SENIOR COUNSEL FOR
SMT. TANMAYEE RAJKUMAR, ADVOCATE)
THIS CEA / CENTRAL EXCISE APPEAL UNDER SECTION
35G OF THE CENTRAL EXCISE ACT, PRAYING TO ANSWER THE
SUBSTANTIAL QUESTIONS OF LAW FRAMED ABOVE IN
FAVOUR OF THE APPELLANT IN THE INTEREST OF JUSTICE
AND EQUITY. SET ASIDE THE IMPUGNED FINAL ORDER
No.A/20703/2020 DATED 23.09.2020 PASSED IN
ST/20415/201 (IN COMMON FINAL ORDER No.20691-
20708/2020) PASSED BY THE HON'BLE CESTAT, SOUTH
ZONAL BENCH, BENGALURU VIDE ANNEXURE-A.
IN CEA No.12/2022
BETWEEN:
1. COMMISSIONER OF CENTRAL EXCISE
AND SERVICE TAX
7TH FLOOR, TRADE CENTRE,
-8-
NC: 2026:KHC:22182-DB
CEA No. 9 of 2022
C/W CEA No. 2 of 2022
CEA No. 3 of 2022
HC-KAR AND 5 OTHERS
BUNTS HOSTEL ROAD,
MANGALORE 575003.
...APPELLANT
(BY SRI ARVIND V. CHAVAN, ADVOCATE)
AND:
1. M/S KARNATAKA BANK,
MAHAVEERA CIRCLE,
PUMPWELL, KANDANADY,
MANGALORE 575002.
...RESPONDENT
(BY SRI G. SHIVADAS, SENIOR COUNSEL FOR
SMT. TANMAYEE RAJKUMAR, ADVOCATE)
THIS CEA / CENTRAL EXCISE APPEAL UNDER SECTION
35G OF THE CENTRAL EXCISE ACT, PRAYING TO ANSWER THE
SUBSTANTIAL QUESTIONS OF LAW FRAMED ABOVE IN
FAVOUR OF THE APPELLANT IN THE INTEREST OF JUSTICE
AND EQUITY. SET ASIDE THE IMPUGNED FINAL ORDER
No.A/20698/2020 DATED 23/09/2020 PASSED IN
ST/20151/2017 (IN COMMON FINAL ORDER No.A/20691-
20708/2020) PASSED BY THE HON'BLE CESTAT, SOUTH
ZONAL BENCH, BENGALURU VIDE ANNEXURE-A.
THESE APPEALS, COMING ON FOR HEARING THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE S.G.PANDIT
and
HON'BLE MR. JUSTICE K. V. ARAVIND
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NC: 2026:KHC:22182-DB
CEA No. 9 of 2022
C/W CEA No. 2 of 2022
CEA No. 3 of 2022
HC-KAR AND 5 OTHERS
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE K. V. ARAVIND) Heard Sri. Aravind.V.Chavan, learned Senior Standing Counsel for the appellants and Sri. G.Shivadas, learned Senior Counsel on behalf of Smt. Tanmayee Rajkumar, learned counsel for the respondent.
2. All these appeals are filed by the Revenue and raise common questions of law. The learned Senior Standing Counsel and the learned Senior Counsel appearing for the respective parties advanced common arguments. Accordingly, all these appeals are disposed of by this common order.
3. This Court vide order dated 03.08.2022 admitted the following substantial questions of law for consideration, which read as under:
In C.E.A Nos.02 and 03/2022
(i) Whether the CESTAT was right in setting aside the OIOs and allowing the appeals of the assesses, by holding that the banks are eligible to avail Cenvat credit of Service Tax paid on the premium amount for the Insurance Service received by the banks from 'Deposit Insurance and Credit Guarantee Corporation'.
(ii) Whether CESTAT was right in placing reliance on the Larger Bench Decision of the Hon'ble Tribunal, Bangalore
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NC: 2026:KHC:22182-DB CEA No. 9 of 2022 C/W CEA No. 2 of 2022 CEA No. 3 of 2022 HC-KAR AND 5 OTHERS in the assessee-banks' own case vide interim order 13- 31/2020 dated 20.03.2020, which held that a commercial bank is entitled to treat insurance services provided by 'Deposit Insurance and Credit Guarantee Corporation' (DICGC) as an input service and is entitled to take Cenvat credit of Service Tax paid upon receipt of such service. In C.E.A Nos.07, 08, 09, 10, 11 and 12/2022
(i) Whether the Tribunal is right in considering that the activity of business of banking, viz., "transactions in money only" as "services" within the ambit of the Finance Act, 1994?
(ii) Whether the Tribunal is right in further considering the above activity of business of banking as an output service within the ambit of the Finance Act, 1994, especially when no service charges were collected by banks for transactions in money only?
(iii) Whether the Tribunal is right in extending deposit insurance scheme as an input service when essentially there was no service at all by banks, and therefore no output services also, in the business of banking, i.e., when the business of banking was transactions in money only?
(iv) Whether the Tribunal is right in extending deposit insurance scheme as an "input service" merely because it is mandatory and without deposit insurance banks cannot function at all?
(v) Whether the Tribunal is right in equating reinsurance service, which is mandatory and which is for insurance, which is a service, with deposit insurance, which, though mandatory, is not linked to any output service or for that matter any service vis-à-vis the business of banking?
(vi) Whether the Tribunal is right in allowing the CENVAT credit on deposit insurance even after omission of the general entry activities relating to business from the definition of input services vide Notification No. 3/2011 dated 01.04.2011?
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NC: 2026:KHC:22182-DB CEA No. 9 of 2022 C/W CEA No. 2 of 2022 CEA No. 3 of 2022 HC-KAR AND 5 OTHERS
4. The facts in C.E.A No.11/2022 are referred to for convenience.
5. At the outset, Sri G. Shivadas, learned Senior Counsel appearing for the respondent, submitted that the Customs, Excise and Service Tax Appellate Tribunal (for short, 'CESTAT'), while answering the controversy in favour of the assessee, had followed the order of the Larger Bench of CESTAT in South Indian Bank vs. Commissioner of Customs, Central Excise & Service Tax, Calicut.
5.1 It was further submitted that the order of the Larger Bench was the subject matter of appeal before the High Court of Kerala in The Principal Commissioner of Central Tax and Central Excise vs. M/s South Indian Bank 2022:KER:76979. It is submitted that the High Court of Kerala, by judgment dated 05.12.2022 in C.E. Appeal No.1/2021 and connected matters, answered the questions in favour of the assessee and against the Revenue by affirming the order of the Larger Bench of the CESTAT.
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NC: 2026:KHC:22182-DB CEA No. 9 of 2022 C/W CEA No. 2 of 2022 CEA No. 3 of 2022 HC-KAR AND 5 OTHERS 5.2 It is also submitted that the Bombay High Court answered the questions in favour of the assessee in Commissioner of CGST and Central Excise vs. Yes Bank Ltd. in Central Excise Appeal No.21/2021 dated 12.09.2023, following the judgment of the High Court of Kerala in the case of M/s South Indian Bank (supra). It is further submitted that, in view of the judgments of the High Court of Kerala and the Bombay High Court, the questions of law arising in these appeals ought to be answered in favour of the assessee and against the Revenue.
6. Sri Jeevan J. Neeralgi and Sri Aravind V. Chavan, learned Senior Standing Counsel appearing for the appellants-Revenue, submit that the judgments of the High Courts on the identical issue are pending consideration in appeal before the Supreme Court of India.
6.1 Sri Jeevan J. Neeralgi, learned Senior Standing Counsel, submits that the reliance placed on the judgment of this Court in Commissioner of Central Excise, Bangalore v. PNB MetLife India Insurance Co. Ltd. [2015 (39) STR 561 (Kar)] is misplaced and that the said decision is inapplicable to the facts of the present cases. On the strength of the above
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NC: 2026:KHC:22182-DB CEA No. 9 of 2022 C/W CEA No. 2 of 2022 CEA No. 3 of 2022 HC-KAR AND 5 OTHERS submission, the learned Senior Standing Counsel seeks to distinguish the judgment of the High Court of Kerala.
7. We have considered the submissions made by the learned Senior Standing Counsels for the appellants-revenue and learned Senior Counsel for the respondent-assessee.
8. On a perusal of the impugned order, it is evident that the Tribunal, following the order of the Larger Bench, allowed the appeals by answering the controversy in favour of the assessee and against the Revenue. The order of the Larger Bench was the subject matter of consideration before the High Court of Kerala in the case of M/s South Indian Bank (supra). 8.1 The High Court of Kerala, by judgment dated 05.12.2022 in C.E. Appeal No.1/2021 and connected matters, after an extensive analysis of the reasoning assigned by the Larger Bench, including reference to the Banking Regulation Act, 1949, answered the questions in favour of the assessee, thereby affirming the order of the Larger Bench. Similar questions have also been answered by the Bombay High Court, following the judgment of the High Court of Kerala.
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NC: 2026:KHC:22182-DB CEA No. 9 of 2022 C/W CEA No. 2 of 2022 CEA No. 3 of 2022 HC-KAR AND 5 OTHERS 8.2 The submission of the learned Senior Standing Counsels appearing for the appellants-Revenue that reliance placed on the judgment of this Court in the case of PNB MetLife India Insurance Co. Ltd. (supra) is incorrect, is of no consequence. The High Court of Kerala has noticed that substantial consideration was given to the nature of, and the requisite compliances to be adhered to by, banks in terms of the regulatory framework governing the grant and continuance of a banking licence. The reference to PNB MetLife India Insurance Co. Ltd. (supra) is only incidental. The submissions made by the learned Senior Standing Counsels appearing for the appellants-Revenue do not substantiate the need for any further examination of the controversy in question. 8.3 On a perusal of the impugned order and upon considering the judgment of the High Court of Kerala, we are of the view that the questions raised in these appeals are no longer res integra and stand answered by the judgment of the High Court of Kerala. We find no grounds and reasons to take a different view from the view taken by the High Court of Kerala.
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NC: 2026:KHC:22182-DB CEA No. 9 of 2022 C/W CEA No. 2 of 2022 CEA No. 3 of 2022 HC-KAR AND 5 OTHERS
9. In the light of the above, by following the judgment in the case of M/s South Indian Bank (supra) in C.E. Appeal No.1/2021 decided on 05.12.2022, we answer the substantial questions of law framed herein in favour of the assessee and against the Revenue. Accordingly, the appeals stand dismissed.
Sd/-
(S.G.PANDIT) JUDGE Sd/-
(K. V. ARAVIND) JUDGE SMJ/ List No.: 1 Sl No.: 38