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2014 (11) TMI 334 - AT - Service TaxWaiver of pre deposit - Banking and Other Financial Services - appellant-Bank acts as both card Issuing Bank and also Acquiring Bank - Levy of tax on Interchange commission earned by Assessee - interest and penalty under Section 78 - Held that:- When a Credit card is swiped in a machine in the merchant establishment for verification, the issuing bank would verify and whether the credit card holder is eligible for using card before payment and thereafter it would, in turn, communicate the merchant establishment to complete transaction. In this case, both the banks are in reality providing a service to the card holder and the merchant establishment. The Issuing Bank is only providing service to the card holders to confirm their eligibility for credit which cannot be said to be a service to the merchant establishment or to the Acquiring Bank. service received or provided by an Issuing Bank or an Acquiring Bank in the kind of transaction is not covered in any of the clauses of definition of service. In such a situation, the taxability itself is in doubt. - sharing of the commission between the Acquiring Bank and the Issuing Bank cannot be considered as service transaction but as sharing of income between two service providers. - Stay granted.
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