#NBFC

CESTAT Chennai has ruled that NBFCs availing Cenvat credit under Rule 6(3B) for manpower services used exclusively in reverse charge transactions are not required to reverse such credit, as the non-obstante clause overrides the general reversal mandate. This clarifies a critical ambiguity for financial institutions relying on third-party staffing for regulated auxiliary services, significantly reducing compliance risk and tax exposure.

The Calcutta High Court has ruled that the RBI cannot reject an NBFC’s application for voluntary surrender without first giving it a fair chance to meet its Principal Business Criteria, reinforcing that regulatory exit must follow statutory procedure, not administrative fiat. This sets a critical precedent for all NBFCs seeking orderly wind-down without punitive compliance traps.

CESTAT Chennai rules that recovery agent services are integral to money lending operations of NBFCs, entitling them to CENVAT credit under Rule 2(l) of the CENVAT Credit Rules, 2004. The decision clarifies input service eligibility for financial institutions availing reverse charge credit, impacting tax compliance and credit claims in the banking and finance sector.