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2015 (8) TMI 686 - CESTAT DELHI (LB)

2015 (8) TMI 686 - CESTAT DELHI (LB) - 2015 (40) S.T.R. 104 (Tri. - LB), [2016] 87 VST 545 (CESTAT) - Credit Card Services - On and from 01-05-2006 credit card services was deleted from BOFS and incorporated into a distinct service - scope of the ‘Banking and Other Financial Services’ (BOFS) as introduced w.e.f 16-07-2001 - Held that:- introduction of a comprehensive definition of “credit card, debit card, charge card or other payment service” in Section 65(33a) read with Section 65(105) (zzzw), .....

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a retroactive reach i.e. w.e.f. 16.07.2001. Services enumerated in these sub-clauses are not implicit in the scope of credit card services;

Scope of the term Customer - merchants/merchant establishments’ (ME) - Held that:- Held that:- a Merchant/ Merchant Establishment is “a customer” in the context of credit card services enumerated in Section 65(72)(zm), subsequently Section 65(105)(zm) and a fortiori an acquiring bank is “a customer” of an issuing bank.

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162 / 2015 - Dated:- 14-8-2015 - Mr. Justice G. Raghuram, President, Mr. Ashok Jindal, Member (Judicial), Mr. R. K. Singh, Member (Technical), J. For the Petitioner : Shri V. Lakshmi Kumaran, Shri Badarinarayan, Shri Yogendra Aldak, Shri Mihir Mehta, Shri Prakash Shah, Ms. Nupur Maheshwari, Learned counsel; Ld. Consultants Shri Nihal Kothari, Ms. Prajakta Menezes, C.A., Shri Sunil Gabhawala and Shri Kewal Shah For the Respondent : Shri. B.K. Singh, Shri. Rajiv Tandon, Shri. Govind Dixit and Shri .....

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e Finance Act, 1994 (the Act), is the core issue falling for our consideration. The period involved is 16-07-2001 to 30-04-2006, during which credit card services was enumerated within Banking and other Financial services, a taxable service introduced w.e.f 16-07-2001 by the Finance Act, 2001. On and from 01-05-2006 credit card services was deleted from BOFS and incorporated into a distinct service, which we shall for convenience refer to as card services. 2. We are assembled to answer the refer .....

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Section 65(105)(zzzw) by the Finance Act, 2006, is substantive and seeks to levy all the transactions covered by use of Credit/Debit/Charge Card or is in continuation of the levy under Section 65(10) or (12), as the case may be, as held in ABN Amro decision in so far as credit card services are concerned? Whether the sub-clause (iii) in the definition of taxable service viz. credit card, debit card, charge card of other payment card service in Section 65(33a) can be said to be applicable retros .....

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hmikumaran, Shri Badarinarayan, Shri Yogendra Aldak, Shri Mihir Mehta, Shri Prakash Shah, Ms. Nupur Maheshwari, Learned counsel; Ld. Consultants Shri. Nihal Kothari, Shri Sunil Gabhawala and Shri Kewal Shah for the several assessees; and Shri B. K. Singh, Shri Rajiv Tandon, Shri Govind Krishna Dixit and Shri Amresh Jain for Revenue. Textual and contextual ambiguity in enumeration and definition of relevant provisions of the Act pertaining to BOFS invite interpretive exertion and have occasioned .....

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d of taxation (para 17.6). 6. Assessees contend that the analyses leading to and the conclusion above are woolly and misconceived. Per contra, Revenue urges that the ABN Amro Bank reasoning is impeccable and its conclusion unexceptionable. The reference order however records empirical reservations to the trajectory and coverage of credit card services in BOFS, diametrically contrary to the ABN Amro ruling, as under: In the ABN Amro case, a co-ordinate bench of this Tribunal has taken a view that .....

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o qualifies only the credit card services and not the customer who is the service recipient nor the service provider, the issuing bank. Thus only the scope of credit card services is expanded by the said term. The credit card services comprises of a number of services such as extending credit for the purchase of goods and services, withdrawal of cash upto permissible limits, payment of utility bills, payments for travel, foreign exchange transactions and so on. All such services for which credit .....

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65(33a) read with 65(105)(zzzw) (para 5.9). 7. The reference order was passed in four appeals; three preferred by Revenue against adjudication orders which dropped demands of service tax for periods prior to 01.05.2006, on a conclusion that activities of acquiring and credit card issuing banks were brought under the purview of service tax only w.e.f. 01.05.2006. Consequently, the adjudicating authority dropped demands for service tax for periods prior to 01.05.2006. Another appeal before the re .....

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the Commissioners of Service Tax, Chennai and Mumbai, respectively had dropped, proceedings against acquiring and issuing banks in respect of commissions/ discounts / service charges received by Citi Bank, HSBC and HDFC on an interpretation that the provisions of BOFS (prior to 01.05.2006) do not authorise levy of service tax on consideration received in relation to settlement of payments by banks or those received for use of the automated teller machines belonging to other banks by card holder .....

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rds, Interchange fee was not a consideration received on rendition of credit cards services as defined in Section 65(10) or 65(12) read with Section 65(72)(zm) and it consequently incurred no liability to tax. Per contra, Revenue contended that relevant provisions (as extant prior to 01.05.2006 as well) were comprehensive enough to authorise levy and collection of service tax on consideration or commission received or retained by either an issuing bank or an acquiring bank in respect of transact .....

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ssuing bank or an acquiring bank in respect of any activity relatable to a credit card transaction, whether by way of fees and other charges realised by an issuing bank from the card holder; interchange fee received by such bank from the acquiring bank towards settlement of ME payment; or the consideration or commission retained by the acquiring bank by way of merchant establishment discount (ME discount), would all amount to consideration received in relation to rendition of credit card service .....

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re. Issuing/ acquiring banks are its members. Merchant Establishment The vendor of goods or service who accepts the card in lieu of cash payment from the card holder. Acquiring bank Provides payment processing services to Merchant Establishments by entering into a separate agreement with the merchant and places a swipe machine at the merchant outlet. Transactional flow in a credit card use scenario (C) The process by which sale of goods or rendition of services through a credit card takes place, .....

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; and provides the card holder an identification code (PIN No.) to be entered by the card holder while procuring goods or services (so as to safeguard against unauthorized use). A card holder makes a purchase at an ME; completes the transaction by swiping his card, employing the swipe machine provided to the ME by the acquiring bank; and signs a transaction slip generated by the swipe machine. This is the point of sale (POS). The network platform provided by the card association facilitates auth .....

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iscount/ commission amount (ranging from 3% to 5%). This amount is called the merchant establishment discount. A settlement report is forwarded to the issuing bank via the interchange network maintained by the card association, for reimbursement to the acquiring bank. Out of the discount/ commission retained by the acquiring bank, a percentage is shared with the issuing bank as Interchange fee and with the card association. The issuing bank accounts for the transaction (for the purpose of recove .....

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lved when sale of goods or rendition of services through a credit card takes place, it is apparent that an issuing bank, an acquiring bank and the card association network receive consideration for participation in and facilitation of several obligations inherent in the sequence of events contributing to successful culmination of a transaction involving use of a credit card. The issuing bank recovers from its card holder certain charges such as the joining fee; additional card fee; annual fee et .....

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ion, less the ME discount specified in such agreement. The liability of the acquiring bank to settle dues of the ME is independent of its ability to recover from the issuing bank. On conclusion of a transaction, reports are generated by the network facilitation platform provided by the card association and forwarded to the acquiring bank. The acquiring bank is thereafter required to settle payments to the ME less its agreed ME discount. A settlement report is simultaneously forwarded to the issu .....

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d acquiring banks. The fee or charges, if any, collected by card associations from its member banks is however not the subject matter of any of the disputes involved in this reference. 11. The respective parties are agreed that the fees/ charges / amounts collected by an issuing bank from its card holder is a consideration received for rendition of credit card services, and that this is a legitimate taxable value. The dispute is confined to taxability of the interchange fee earned by the issuing .....

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s introduced w.e.f. 16.07.2001 by the Finance Act, 2001. Credit Card Services was a component of BOFS as defined, since its inception in 2001 until its deletion from BOFS by the Finance Act, 2006, w.e.f. 01.05.2006. The definition and enumeration of BOFS during 2001 to 2006 underwent several amendments, in its numerical signification and location in the Act, in the scope of its components as well as the trajectory of the several components of this service, during this period. W.e.f. 01.05.2006, .....

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under: banking and financial services means the following services provided by a banking company or a financial institution including a non-banking financial company, namely:- financial leasing services including equipment leasing and hire purchase by a body corporate; credit card services; merchant banking services; securities and foreign exchange (forex) broking; asset management including portfolio management, all forms of fund management, pension fund management, custodial , depository and .....

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scope of the service provider in BOFS to include any other body corporate, as well. The components of BOFS were however unamended. Finance Act, 2003, w.e.f. 14.05.2003 relocated the definition of BOFS to sub-section (12) of Section 65. This amendment also added foreign exchange broking provided by a foreign exchange broker other than those covered under sub-clause (a) to the category of services enumerated in the definition of BOFS. BOFS now read: (12) banking and other financial service means- .....

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does not include cash management; advisory and other auxiliary financial services including investment and portfolio research and advice, advice on mergers and acquisitions and advice on corporate restructuring and strategy; and provision and transfer of information and data processing; foreign exchange broking provided by a foreign exchange broker other than those covered under sub-clause (a); foreign exchange broking provided by a foreign exchange broker other than those covered under sub-cla .....

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e-existing components in (viii), the words, Banker to issue services; and. Initially BOFS was enumerated to be a taxable service in Section 65(72) (zm), later renumbered as Section 65(105)(zm). Throughout the relevant period in issue i.e. 16.07.2001 to 30.04.2006, relevant provisions Section 65(72)(zm) or Section 65(105)(zm) as the case may be, enumerated BOFS as meaning any service provided (or to be provided) to a customer by the provider of this service (as the provider was defined, from time .....

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siness, including receipt and processing of application, transfer of embossing data to issuing bank s personalisation agency, automated teller machine personal identification number generation, renewal or replacement of card, change of address, enhancement of credit limit, payment updation and statement generation; by any person, including an issuing bank and an acquiring bank, to any other person in relation to settlement of any amount transacted through such card. Explanation.- For the purpose .....

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de marks or brand name to the issuing bank under an agreement for use of the trade mark or brand name and other services in relation to such card, whether or not such owner is a club or association and the issuing bank is a member of such club or association. Explanation. - For the purposes of this sub-clause, an issuing bank and the owner of trade marks or brand name shall be treated as separate persons; Section 65(105)(zzzw) enumerated as a taxable service any service provided or to be provide .....

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rpretation of the scope of credit card services in BOFS, during the pre - 01.05.2006 era. 15. Summary of contentions on behalf of assessees: (a) Credit Card Services (prior to 01.05.2006), is a service provided (or to be provided), in relation to credit card services by a banking company, a financial institution including a non-banking financial company, any other body corporate or a commercial concern (provider), to a customer of the provider. Thus, services rendered to a customer of the provid .....

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ect of credit card services, a customer must therefore mean the holder of a card of the issuing bank; (c) The ME has a contractual arrangement with an acquiring bank, which undertakes settlement of payments to the ME in respect of the value of goods sold or services provided under a credit card transaction, employing the point of sale (POS) machine provided by the acquiring bank. ME is not a customer of the issuing bank nor has a contractual relationship with it. ME is also not a customer of the .....

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vice whereby credit facility is provided to a customer. Credit facility in respect of credit cards, is provided by the issuing bank to its card holders and to none else. Services provided by an issuing bank to the acquiring bank or those provided by the acquiring bank to the ME, are not credit facility and in the transactional sequence, neither the acquiring bank nor the ME receive any credit facility; (e) The expression Credit Card Services is not defined nor its scope annotated in the Act, dur .....

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g) RBI Circular dated 12.12.2003 clarifies the scope of credit card business in terms of reciprocal obligations between an issuing bank and its card holder. Neither ME discounts and interchange fee, nor services rendered between issuing and acquiring banks or between acquiring banks and ME s are considered in the RBI circular. Thus, (i) providing of a credit facility by an issuing bank to its card holder, on the one hand; and (ii) undertaking an obligation of settling payments by an issuing bank .....

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rising out of the activity of the issuing bank providing a card not do they per-se arise out of possession of a credit card by its holder. These obligations are predicated in law, upon independent agreements between an issuing and an acquiring bank and an acquiring bank and the ME, respectively; (h) While the process of effectuation of credit card transactions is accomplished by confluence of activities and undertaking of obligations by several participants [set out in para 10(A), (supra)], ther .....

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ise out of distinct contractual agreements. Services provided by an issuing bank to an acquiring bank or by an acquiring bank to ME cannot therefore be brought within the scope of services provided in relation to credit card services, particularly since the legislative reach is expressed to be directed towards any service provided in relation to credit card services and not in relation to credit card. (i) The right of an ME to receive payment from the acquiring bank is subject to strict conformi .....

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e admittedly outside the purview of the taxable service during the relevant period. (j) W.e.f. 01.05.2006 Card Service is introduced as a distinct service defined in Section 65(33a) read with Section 65(105)(zzzw). With effect from this date the ambit of the service was also expanded, to include several categories of cards and a variety of activities in relation to card transactions as well. These were explicitly brought within the scope of the service with clarity and precision. Only since 01.0 .....

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intent not to cover interchange fee or ME discount within the scope of BOFS. (k) Board Circular dated 28.02.2006, clarifying the scope of card services introduced w.e.f. 01.05.2006 as being comprehensive, supports the interpretation that the scope of Credit Card Services as a component of BOFS, covered a limited and narrow locus. (l) W.e.f. 01.05.2006 and introduction of Card Services, sub-clause (iii) of Section 65(33a), considered in an interactive context reads: Credit card, debit card, char .....

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in the Act including in Section 65(10), (11) or (12). These expressions are defined only on enactment of Card Services and in Section 65(33a). Services provided by an issuing bank to the acquiring bank or those provided by an acquiring bank to the ME are neither credit facilities nor services in relation to Credit Card Services and are either expressed nor intended to be exigible to service tax, prior to 01.05.2006. (n) Revenue contends that any services provided in relation to card transaction .....

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lationship to the subject matter to which the expression is intended to apply. On Revenue s interpretation, since a credit card transaction cannot be concluded without authentication and settlement facilitation provided by employing telephony or internet network, consideration charged by telephone / telecommunication and internet service providers would equally fall within the scope of Credit Card Services. Such an interpretation would lead to absurd and indeterminate results. (o) Assessees furt .....

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ually exclusive should not be levied simultaneously; 16. Since the Larger Bench is constituted only to answer issues referred for its consideration, determination of issue, in sub-para (o) supra is outside the scope of the reference. These would be considered during the course of disposition of each of the appeals on merits, by the appropriate Bench. 17. Summary of the Revenue position: (i) During 2001 to April 2006 credit card services were covered within the purview of BOFS. This component of .....

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mploy different expressions to identify persons to whom different taxable services are provided, so as to cover only so specified transactions between specified parties. Different taxable services identify recipients of the several services as: a subscriber; a policy holder; a client; a shipping line; any person; and a customer. While expressions like policy holder; investor; and subscriber indicate a specified status of the service recipient; where the service recipient is expressed as being, a .....

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body corporate or a commercial concern, as well. Therefore, it is impermissible to confine the recipient of this taxable service merely to an account holder of a banking company. The expression a customer must therefore mean a recipient of goods, services, products, or ideas obtained from a seller, vendor or supplier for monetary or other valuable consideration. (iv) Agreements between ME s and acquiring banks clearly indicate that ME s maintain an account with acquiring banks with whom a contr .....

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ntinuous or for any specified duration. The relationship of a bank and a customer commences as soon as the first transaction is entered into. (vii) Credit card services commence with issuance of the card by the issuing bank. These services however do not end with swiping of the card at the ME. The entire process by which credit card transactions are successfully concluded i.e. issuance of the card; the card holder obtaining goods or services at the ME; authentication and verification of the card .....

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d in relation to credit card services, under BOFS. The word in relation to signifies the legislative intention to widen and expand the scope, meaning and content. Thus, all integral, ancillary and intermediary activities essential for effective operation of a credit card transaction fall within the ambit of credit card services, on an interactive interpretation of the enumerative and definitional provisions of BOFS. Services provided to ME by an acquiring bank and those provided to an acquiring .....

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pe of credit card services in BOFS, for the prior period. While drafting Section 65(33a), including sub-clause (iii) thereof, Parliament adopted a different, detailed and annotative form of drafting, than in BOFS. In so far as credit card services under BOFS, the same result was achieved by enacting that any service provided in relation to credit card services is the taxable service. The expansion brought about by words used in the definition of card services in Section 65(33a) is in several oth .....

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ng bank and an acquiring bank, which are necessary and integral to effectuation of sale of goods or rendition of services through the instrumentality of credit cards are services provided in relation to credit card services. Sub-clause (iii) of Section 65(33a) need not be considered as having a retrospective operation. The difference in phraseology in enumeration and definition of credit card services in BOFS and of card services (during pre and post 01.05.2006 periods) are mere differences in d .....

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sidered: (a) Whether an issuing bank could be considered a customer of an acquiring bank or ME; an acquiring bank, a customer of an issuing bank; or the ME, a customer of the acquiring bank; (b) Which of the transactions, in the sequence of transactions necessary for successful sale of goods or rendition of services through a credit card amount to services provided in relation to credit card services; and (c) Whether ambiguity in drafting of the relevant provisions; failure to identity several s .....

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amount charged by the service provider for such service rendered by him. During the relevant period, i.e. the period during which credit card services were in BOFS, enumeration of this taxable service was in Section 65 (105)(zm). This provision specified the service as one provided or to be provided, to a customer, by a banking company, a financial institution, including a non banking financial company (for a later period, any other body corporate or a commercial concern, as well), in relation t .....

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railway bookings, petrol pumps, utility bill payments, etc. Cash advances are also permitted upto specified limits in most of the cases. This service is provided by nationalised banks, multi-national banks and private banks. 2.2-2 For rendering the service, the service provider collects joining fee, additional card fee, annual fee, replacement card fee, cash advance fee, charge slip/ statement retrieval fee, surcharge/ service charges on railway fare, fuel charges, and utility bill payments, cha .....

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rt from providing cash advances; such services are provided by nationalised banks, multi-national banks and private banks; and the consideration for rendition of credit card services is by way of joining fee, additional card fee, annual fee, replacement card fee, cash advance fee, charge slip/ statement retrieval fee, surcharge/ service charges on railway fare, fuel charges etc; charges on over limit accounts; late payment fee; interest on delayed payment; interest on revolving credit and like f .....

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anks, directing adoption of additional safeguards to ensure proper credit card operations. Paragraphs (i) and (v) of the RBI circular are relevant and read: Recovery of overdues Credit card debit card is an unsecured line of credit. Repayment of credit card dues depends primarily upon the card holders capacity to repay. The highly competitive environment in credit card business has provided customers with opportunity to hold more than one credit card from different banks with the intention to pa .....

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mediate steps to reduce the incidence of default in the business and closely monitor the recovery of credit card outstandings. Banks may formulate specific Action Plans to this effect with the approval of their Board of Directors. (v) Fees/Charges on credit cards Fees are charged by banks for services in respect of credit card operations. These include membership/ entrance fees, renewal / annual fees, service charges on revolving credit card facility and penal charges for overdue payments. Dispu .....

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n of banks. This circular specifies rules, regulations and standards and identifies good practices for guidance and compliance by issuing banks/ NBFC s for credit card business. The master circular sets out the background and structure of credit card operations; basic features and types of credit cards; fair practices to be adopted; methodology for issue of cards; interest, trade and other charges which may be collected; guidelines for avoidance of wrong billing; norms for protection of customer .....

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d the master circular does not deal with or advert to any services provided to an acquiring bank or the ME. Assessees also refer to textual authorities, of Chitty on Contracts (Twenty-Seventh Edition); Paget s Law of Banking (Ninth and 12th Edition; Goode on Commercial Law (Fourth Edition); and Halsbury s Laws of England (third edition); to explain the nature of and distinction between credit and other payment cards, sequence of events and transactions that occur in a credit card use, structure .....

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e by Lord Jowitt, L.C. and Lord Esher, M.R. in London and North Eastern Co. vs. Berriman (1946) 1 ALL. E.R. 255 and Unwil vs. Hanson (1891) 2 QB 115 (C.A.). The principle is this. In construing a legislation relating to a particular industry, it is legitimate to give to the words used, a special technical meaning if it can be established that at the date of passing the statute such meaning was well understood and accepted by those conversant with the industry. Assessees point out that this princ .....

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;; and Woods vs. Martins Bank Limited and Another AIR 1957 Mad 745 ; to judgments of the Madras High Court in N.M.N. Duraiswami Chettiar vs. The Dindigul Urban Cooperative Bank Ltd., and another; AIR 1957 Mad 745 and the Official Assignee, Madras vs. Natesan Pillai AIR 1970 Ker 74; and judgment of the Kerala High Court in Central Bank of India Limited vs. Gopinathan Nair and Ors. AIR 1970 Ker 74. Revenue cited the judgment of the Court of Appeal in Importers Company. Limited vs. Westminister Ban .....

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ible to contend, as a matter of law, that the bank for which the respondents were doing the business, was not, in reference to that business, their customer. Atkin L.J. however recorded a caveat and to this extent. He observed that where a non-clearing bank regularly employs a clearing bank to clear its cheques, the non-clearing bank would be a customer of the clearing bank. However, a non-clearing bank may have a lay customer and would employ a clearing bank as its bank for collection if the ch .....

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s. The issue before us is however, what is the intendment of Parliament in confining BOFS provided to a customer , by a banking company, financial institution including a non-banking financial company or any other body corporate or commercial concern in relation to BOFS, while specifying the taxable event and defining the taxable service. The Act has not defined customer . Overseas and Indian authorities, referred to in preceding sub-paras do not guide us to a singular normative destination, as .....

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ce, entering upon a course of dealing with a banking entity is sufficient to establish the relationship of a banker and a customer and that it is the business relation, a continued practice of rendition of banking services, as distinct from an isolated act or a transaction, that is the essence of a customership relation. It is a settled position that the legislature is authorised to identify persons, things, transactions or events for legislating a social or taxation policy; and where legislatur .....

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on to credit card services, services provided by an issuing bank to an acquiring bank or the later bank to the ME, were not intended by Parliament to fall within the scope of services provided in relation to credit card services. Only services provided by an issuing bank to its card holder comprised extension of credit facilities and these alone were covered under BOFS. Both parties provided sample copies of agreements entered into between the ME and an acquiring bank. The agreements are substan .....

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the ME the amount payable on authorized card transactions, after deducting fee/ commission service at the stipulated rate; with a further stipulation that the acquiring bank would be entitled to charge back the charges indicated in the terms pertaining to charge backs. The provision in the agreements relating to charge backs stipulates several circumstances on the occurence of which an acquiring bank would be entitled to recover amounts paid to the ME under card transactions, from the account o .....

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ng an interchange fee, which is shared with the card association. The continuity and regularity of such commercial intercourse between acquiring and issuing banks, in our considered view leads to the position of acquiring banks being customers of issuing banks. Issuing and acquiring banks are recognised participants in the nuanced business of credit card transactions. The interdependant and seamless but distinct transactions that occur between the ME, an acquiring bank and an issuing bank theref .....

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ank, is textually inappropriate. Further, banking companies, in the current scenario of expanding commercial transactions undertake a variety of activities which were not conceived as part of ancient or traditional banking activities. It would therefore be appropriate to conclude (in the context of BOFS), that a customer of a bank includes any person or entity having a continuum of relationship or transactional intercourse with a banking company, within the ambit of activities pursued by the lat .....

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cquiring bank, respectively. WHETHER INTERCHANGE FEE AND ME DISCOUNT FORM PART OF THE TAXABLE VALUE OF BOFS: 20. Whether interchange fee or ME discount amount to consideration received for rendition of credit card services depends on whether services provided by an acquiring bank to the ME and those provided by an issuing bank to the acquiring bank fall within the ambit of services provided in relation to credit card services. Relying on the Board Circular dated 09.07.2001, RBI Notification date .....

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es Bally SA vs. Belgian State dated 25.05.1993; Commissioner of Customs and Excise vs. Primback Limited, dated 15.05.2001; and Dixons Retail plc vs. Commissioners for Her Majesty s Revenue and Customs, dated 21.11.2013; judgments of the Court of Appeal in In Re Charge Card Services Limited (1989) CL 497; Customs and Excise Commissioners vs. Diners Club Limited and Another (1989) 1 WLR 1996; Commissioner of Customs and Excise vs. Debenhams Retail plc (2005) EWCA Civ 892; Custom and Excise Commiss .....

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dered by it to the supplier, is qua an independent transaction in respect of which the purchaser is a third party. Primback Limited reiterated the analyses and the ruling in Bally to hold that the relationship between the seller and purchaser and between the seller and the finance house, must be distinguished for the purpose of determining the basis for calculating VAT. Consequently, the fact that the supply of services by the finance house is, in principle VAT - exempt has no bearing on the bas .....

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AT element. ME claimed refund of the sales tax (VAT) remitted. The Second Chamber of the EEC Court ruled in the circumstances, that the physical transfer of goods to a purchaser who fraudulently uses the bank card as a means of payment yet constitutes a supply of goods within the meaning of the relevant provisions of applicable Council Directives and consequently in the context of such transfer, the payment made by a third party under an agreement concluded between it and the supplier of those g .....

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holders, whereby suppliers agreed to receive cards towards payment for the goods and card holders were entitled to use the cards to commit the card issuing company to honour its obligation to pay suppliers. The card holders were obliged to pay the issuing company the full price charged by the supplier; and there was no general principle of law that a method of payment involving risk of non-payment by a third party created a presumption that acceptance of that method constituted conditional payme .....

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re payable to the card issuer or to the factor, with whom the card issuing company had entered into an invoice discounting agreement, to finance its activities and had sold its receivables to such factor. The Court of Appeal in Diners Club Limited also noticed distinct contractual agreements between a card issuer and a card holder; and between ME (retailer) and the Card issuer (tax payer), in the context of determining whether the card issuer was entitled to recover only a reduced portion of inp .....

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y a reduced portion of input tax on taxable supplies made to it. In the factual context, the Court held that the services provided by the card issuer was the making of payments to the ME pursuant to a contractual obligation and in consideration for deduction of a discount and that the entire transaction was for supply of a service to the ME by the card issuer, falling within the ambit of provisions of the VAT Act, 1983. In Debenhams Retail plc, the respondent an ME introduced a scheme whereby sa .....

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al, the Court held that for a customer paying by card, once the card is accepted at the till the transaction is completed in relation to the store and settlement of payment obligations resulting from use of the card is a matter between the store and the card issuer. The purchaser has nothing to do with that, whatever may occur between the card issuer and the store or via the acquirer, where there is one. Even if the documentation seen by the customer/ card holder could otherwise be read as indic .....

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er a distinct type of transaction, also involving credit card use. The respondent supplied credit card services to banks. Its clients were either issuing or acquiring banks or some which acted in both capacities. Some banks outsourced their obligations in respect of typical credit card transactions to the respondent which maintained two accounts; card holders accounts and merchants accounts. On being notified that a credit card transaction occurred, the respondent posted a credit to the merchant .....

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nt out of its own funds to each client bank which was a net claimant and received on the same day a payment from each bank which was a net debtor and thereafter posted a debit to the card holder s account, to which it also posted credit entries when the card holder paid the monthly bill. The respondents also provided connected services comprising arranging of credit card embossing, preparing and sending to the card holder periodic statements of indebtedness to the issuing bank and like services. .....

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to which others were ancillary, but comprised a bundle of supplies none of which predominated over others, it was necessary to identify elements which comprised the core supplies and arrive at a decision on the facts, whether taxable or exempt elements predominated. In the instant case, the making of transfers was at the centre of the core supply of the respondents transactions and this was exempt under the relevant EC Council Directive, ruled the Court. Provisions of Section 131 of the Negotia .....

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en an issuing bank and a card holder; the ME and an acquiring bank; an acquiring bank and the issuing bank; and between issuing and acquiring banks and another entity which provides services such as netting - off services, as seen in the facts of FDR Limited. The existence of such distinct agreements and the legal consequences thereof were however considered in the context of the relevant legislation/ norms, whether VAT legislation or Directives of EEC Council. In the context of BOFS, in our con .....

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tuation of credit card transactions, is indisputable. The problematic is however in identifying which among the such distinct but sequential and interdependant transactions amount to services provided in relation to credit card services, in the context of the definition and enumeration of BOFS, in relevant provisions of the Act. SCOPE OF SERVICES PROVIDED IN RELATION TO CREDIT CARD SERVICES: 21. Under the Act and during the period in issue any service provided or to be provided, by a banking com .....

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vant provisions, since services provided by an acquiring bank to the ME and an issuing bank to the acquiring bank are as essential to conclusion of transactions employing credit cards as are the services provided by an issuing bank to the card holder i.e. in issuing the credit card and the integral credit facility, it could be contended, as has been, that an acquiring bank and an issuing bank receive taxable consideration by way of ME discount and interchange fee. Assessees however contend that .....

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.f. 01.05.2006. 22. As noticed earlier, card services were introduced w.e.f. 01.05.2006, defined in Section 65(33a). Section 65(105)(zzzw), the enumerative provision states that services provided to any person (not merely a customer), by any other person in relation to credit card, debit card, charge card or other payment card service in any manner is a taxable service (emphasis added). Clause (33a)(i) defines an issuing bank as a banking company, financial institution including a non-banking fi .....

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s, enhancement of credit limit, payment updation and statement generation. Sub-clause (iii) enumerates services provided by any person including an issuing bank or an acquiring bank, to any other person in relation to settlements of any amount transacted through such card. The explanation under sub-clause (iii) defines an acquiring bank as one which makes payments to any person who accepts such card. Sub-clause (iv) enumerates services provided in relation to joint promotional cards, affinity ca .....

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on to such card, whether or not such owner is a club or association and the issuing bank is a member of such club or association. The explanation to this sub-clause (vii) states that for the purposes of this sub-clause, an issuing bank and the owner of credit card and brand name shall be treated as separate persons. From the detailed specification of varieties of services defined as falling under card services, it is apparent that w.e.f. 01.05.2006 three significant changes are introduced, in co .....

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provided by any person in relation to credit card, debit card, charge card or other payment card, in any manner, is now the taxable service; The nature and variety of services included within the ambit of card services is now specifically enumerated, notwithstanding use of includes prefixed in clause (33a) and a comprehensive clause in any manner in Section 65(105)(zzzw); and Services enumerated in sub-clauses (i), (ii), (iii), (vi) and (vii) could well be conceived as those provided in relation .....

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taxable event with clarity and precision. Assessees therefore argue that prior to 01.05.2006, credit card services under BOFS must be understood as confined to (credit facility) services provided by an issuing bank to its card holder, as clarified in Board Circular dated 09.07.2001, in the RBI Circular dated 12.12.2003 and the RBI Master circular. Revenue contends to the contra and for reasons advanced for this contention, earlier noticed. Revenue also contends that in construing the scope of cr .....

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Before we proceed to identify transactions which fall within the purview of credit card services under BOFS, we shall notice settled and overarching principles of interpretation applicable to taxing statutes. Lord Simonds in St. Aubyn (LM) vs. A.G., 1952 AC 15 (HL) observed that in interpreting a section in a taxing statute, the question is not at what transaction the section is according to some alleged general purpose aimed, but what transaction its language according to its natural meaning f .....

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rden and that equitable construction of the words is not permissible. Precedents also clarify that if a taxing provision is, so wanting in clarity that no meaning is reasonably clear, the courts will be unable to regard it as of any effect vide IRC vs. Ross and Coulter(1948) 1 ALL ER 616 (HL), a decision quoted with approval in Gursahai vs. CIT (1963) 3 SCR 893. If the words used in a taxing statute are ambiguous and reasonably open to be two interpretations, benefit of interpretation is given t .....

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988) 1 SCC 384; and Commissioner of Customs vs. Acer India (P) Limited (2008) 1 SCC 382. In interpreting a taxing statute, considerations of hardship, injustice or anomalies do not play any useful role, unless there be some real ambiguity vide Mapp vs. Oram (1969) 3 ALL 215 (HL); and State Bank of Travancore vs. CIT (1986) 2 SCC 11. 24. As noticed, Revenue contends that since under the BOFS regime, any service provided or to be provided to a customer, by a banking company etc. in relation to cre .....

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relation to credit card services. Reliance is placed on Collector of Central Excise, Jaipur vs. Rajasthan State Chemical Works, Rajasthan (1991) 4 SCC 473; Doypack Systems (Pvt.) Limited vs. Union of India (1988) 2 SCC 299; CCE vs. Solaris Chemtech Limited and Others (2007) 7 SCC 347; State of Karnataka vs. Azad Coach Builder 2010 (262) ELT 32 (SC); and Flex Engineering Limited vs. Commissioner of Central Excise, U.P. 2012 (276) ELT 153 (SC). The meaning of the expression in relation to came up .....

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e expression in relation to and pertaining to are broad expressions which pre-suppose another subject matter and are words of comprehensiveness which might have a direct signification as well as an indirect one depending on the context. Reiterating the principles of grammatical construction, the decision pointed out that words in a statute must, prima-facie, be given their ordinary meaning. Where the grammatical construction is clear and manifest and without doubt, that construction ought to pre .....

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are no golden rules. There is an equally established principle of construction, that if the language of the statute is capable of bearing more than one construction, in selecting the true meaning regard must be had to the consequences resulting from adopting the alternative construction; and a construction that results in hardship, serious inconvenience, injustice, absurdity or anomaly or which leads to inconsistency, uncertainty and friction in the system which the statute purports to regulate .....

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(2004) 5 SCC 583; Modern School vs. Union of India (2004) 5 SCC 583. The House of Lords in Grey vs. Pearson (1957) 6 HLC 61 explained that if the grammatical construction leads to some absurdity or some repugnance or inconsistency, it may be departed from so as to avoid such consequences. The Supreme Court in N.T. Veluswami Thevar vs. G. Raja Nainar AIR 1959)SC 422 cautioned that a construction giving rise to anomalies should be avoided. 26. On the basis of the above broad principles guiding in .....

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hat any service provided to a customer by a banking company etc. in relation to credit card services, is a taxable service. Acceptance of this construction would lead to infinite expansion of the taxable event. Not only would credit facilities provided by an issuing bank to its card holder fall within the scope of this service but services such as receipt and processing of credit card applications; transferring of embossing data to the issuing bank s personalisation agency; teller machine person .....

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es. These services are expressly enumerated in sub-clauses (ii), (iii), (vi) and (vii) of Section 65 (33a), w.e.f. 01.05.2006. On Revenue s interpretation, these services are subsumed within credit card services on account of the in relation to phrase. Wherever an issuing bank hives of some of its activities in relation to credit card operations, such as receipt and processing of credit card applications and the like and these services are provided by a outside agency, these would nevertheless f .....

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d ambiguous taxation and inchoate specification of the taxable event in a fiscal legislation. 28. To support acceptance of the principle of construction which states that for avoidance of ambiguity a restrictive construction should be adopted, assessees contend that the guidance provided by Board Circular dated 09.07.2001 must be accepted as a correct and contemporaneous executive exposition of the scope of credit card services and on this basis the inference is compelling that only services pro .....

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ion is ambiguous i.e., fairly and equally open to diverse meanings, a later provision may in certain circumstances serve as a parliamentary exposition of the former, vide Ram Kishana Ram Nath vs. Janpad Sabha AIR 1962 SC 1073; Jogendranath Naskar vs. Commissioner of Income-tax AIR 1969 SC 1089; Valley Portland Cement Co. Ltd. vs. General Mining Syndicate Pvt. Ltd. (1976) 3 SCC 852; U.P. Co-operative Cane Union Federation Ltd. vs. Liladhar 1980 Supp SCC 437; Cape Brandy Syndicate vs. IRC (1921) 2 .....

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f there by any ambiguity in the earlier legislation then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier. In State of Bihar vs. S. K. Roy AIR 1966 SC 1995 Ramaswami, J. stated: it is a well recognised principle that subsequent legislation may be looked at in order to see what is the proper interpretation to be put upon the earlier Act where the earlier Act is obscure or ambiguous or readily capable of more than one interpretation. 30. In Thirumani .....

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te trade or commerce. The amendment was considered by the Supreme Court as an exposition by Parliament itself of its intent contained in the Section before its amendment and the Court held that it was the person making the sale in the course of inter -State trade or commerce who was entitled to refund even when the unamended section was in force. 31. In Zee Telefilms Ltd. vs. Commissioner of C. Ex. (Appeals), Mumbai-IV 2006 (4) STR 349 (Tri. Mum.) , the issue was whether services provided by app .....

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onnected with the making, preparation, display or exhibition of advertisement and including advertising. The enumerative provision in Section 65(48) enact that this service is any service provided to a client, by an advertisement agency in relation to advertisement in any manner. Allowing the appeals, Tribunal ruled that appellants do not make or prepare the advertisement; they have neither the expertise nor skill required in this regard; this is done by the advertising agency appointed by the a .....

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cy. That cannot be and is not the coverage of the Service Tax envisaged. In the present case, one cannot ignore term being defined i.e. advertising agency and proceed to levy service tax on - (i) any commercial concern. (ii) providing service connected with making, preparation, display or exhibition of advertisements. If the definition is read in isolation and in an all encompassing manner out of context, then any person/company employing cameraman connected with shooting of advertisement film w .....

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all flashing an advertisement or newspaper/magazine publishing an advertisement will become an advertising agency. Such absurdities, from an interpretation have to be avoided, the term service connected with used in the definition of Advertising Agency is to be understood in context of and in a restrictive manner. 32. In Union of India vs. Martin Lottery Agencies Ltd., 2009 (14) STR 593 (SC); the issue was whether sale, promotion and marketing of lottery tickets was exigible to service tax under .....

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enumerated to be a taxable service in Section 65(105)(zzb) of the Act. According to Revenue the activity of assessees amounted to promotion or marketing or sale of goods produced or provided by or belonging to the client. The High Court of Sikkim allowed the Writ Petition and Union preferred an appeal to the Supreme Court. After the Special Leave Petition was filed, Finance Act, 2008 inserted an explanation in sub-clause (ii) of Section 65 (19). The Explanation stated: For the removal of doubts .....

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ce provided in relation to promotion or marketing of lotteries falls within the ambit of promotion or marketing of service provided by the client , in clause (ii) of Section 65(19) of the Act. The Apex Court negated this contention and observed that while Parliament is entitled to create a legal fiction, when a new type of tax was introduced so as to widen the net, it should not be construed to have a retrospective operation on a premise that it is clarificatory or declaratory in nature. Assesse .....

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ee and ME discount are considerations relatable to services provided by an issuing bank and an acquiring bank to the later and to the ME, and these simultaneous and inter dependant activities effectuate credit card use, these are nevertheless separate transactions and do not amount to rendition of credit card services, assessees rely on the decision of the Judicial Committee of the Privy Council in Commissioner of Inland Revenue vs. Databank Systems Limited. Under an agreement with specified cle .....

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appeal preferred by Revenue and concluded that services performed by Databank as agents for trading banks are part of the exempt financial services provided by those banks to their customers. Privy Council agreed with the Court of Appeal and quoted with approval the following analyses set out in a concurring opinion of the Court below: In these circumstances there are three separate activities, three (at least) separate contracts and three separate supplies for three separate considerations. Th .....

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reference to the charge made by Data bank for its services. The cost of Databank services is passed on to the purchaser (and other customers of the garage) who purchase taxable petrol and are supplied with non-taxable financial services. The supply of petrol by the garage and the supply of computer services by Databank do not attract the exemption afforded to the supply of financial services by the bank. The supply of financial services by the bank does not lose its exemption because the bank s .....

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al or otherwise of the separate activity and supply of financial services by the bank or part of the separate activity and supply of petrol by the garage. Three activities are simultaneous and interdependent but they are separate. There is nothing in the Act which infects separate activity with the exempt or non-exempt status of another separate activity. 34. Learned Jt. CDR Shri Rajiv Tandon referred to the decision of the Larger Bench of the Tribunal in Commissioner of Central Excise, Mumbai-I .....

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he statute; and so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. The Tribunal however cautioned that in a context however, the word Include is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the .....

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s contention that all services provided in relation to credit card services are taxable services under BOFS, therefore services provided by an issuing bank whether to the card holder or an acquiring bank and by an acquiring bank to the ME fall within the ambit of this taxable service. 35. Assessees brought to our notice that Union enacted the Credit Information Companies (Regulation) Act, 2005 to provide for regulation of credit information companies and facilitate efficient distribution of cre .....

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nies including those engaged in the business of credit cards and other similar cards and companies dealing with distribution of credit in any other manner. This Act contains provisions for registration, management and audit of credit information companies, specifies the power of RBI to determine the policy in relation to functioning of credit information companies, sets out functions, information privacy principles and obligations if furnishing credit information for such companies, offences and .....

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cie is that services provided by credit information companies would equally be comprehended within the scope of any services provided in relation to credit card services under the BOFS regime. Assessee contend that the scope of credit card services would thus be perpetually indeterminate and infinitely dynamic. 36. At this stage of the analyses we recapitulate the competing interpretation of credit card services. According to Revenue any services provided in relation to credit card services is a .....

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vices. Per contra assessees contend that the scope of this taxable service is confined to services provided by an acquiring bank to its card holders, notwithstanding the phrase in relation to . 37. We earlier noticed that several decisions including Doypack Systems (Pvt.) Limited explain in relation to as indicative of wide import but as subject to contextual limitations. Decisions in Naveen Chemicals Manufacturing and Trading Company Limited vs. Collector of Customs (1993) 4 SCC 320; Commission .....

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rpretative guidance in such contexts. In Naveen Chemicals, the Court explained that while the phrase in relation to is ordinarily of a wide import but in the context of its use in Section 129-C of the Customs Act, 1962 must be read as meaning a direct and proximal relationship to the rate of duty and to the value of goods, for the purpose of assessment. The Bombay High Court in Indian National Shipowners Association reiterated the established principle that while the scope of the phrase in relat .....

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ployed in the enumerative provision. We are so persuaded since a contrary interpretation which accords unrestricted scope, locus and amplitude to credit card services would result in introducing a serious element of textual ambiguity, indeterminacy and inchoatness to the scope of the taxable event in BOFS. The formidable precedential authority adverted to in paragraph 23 and decisions in Naveen Chemicals and in Indian National Shipowners Association as well, posit adoption of an interprative pri .....

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ning of a statute cannot be relied upon where it results in absurdity, injustice or uncertainty (emphasis) and in such circumstances, the Court must construe the text having regard to the object and purpose which the legislature had in view in enacting the provision, the context in which it occurs and with a view to suppress the mischief sought to be remedied by the legislation. Contemporaneous administrative exposition of the meaning of the statutory text in the speech by the Minister introduci .....

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ed to the conclusion that in the context of BOFS, credit card services cover only such services as are provided by an issuing bank to a card holder. This conclusion is fortified by the clarification issued in Board circular dated 09.07.2001, RBI circular dated 12.12.2003, RBI master circular and the express and specific statutory explication of several services which Parliament has specified to be included in card services, incorporated in the definition of card services, for the subsequent peri .....

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on-temporal inflation of the scope of credit card services in BOFS. Such interpretation must clearly be avoided, is the mandate of established interpretive principles. ANALYSES OF ABN AMRO BANK: 41. After primary analyses of the scope of credit card services in BOFS set out in preceding paragraphs, we analyse ABN Amro Bank. The appeal was preferred against an adjudication order confirming demand for service tax, interest and penalties against the appellant for rendition of credit card services d .....

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contended inter-alia that while it paid service tax on fees and other charges received from its card holders, it did not remit tax on the component of interchange fee received; that settlement services provided to an acquiring bank as an intermediary was brought within the ambit of the taxable value only under the card services regime w.e.f. 01.05.2006, not prior thereto; that the Board circular dated 09.07.2001 also clarified the scope of the taxable service as limited to extension of credit f .....

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ended that credit card service was not introduced as a taxable service only w.e.f. 01.05.2006 but was a taxable service since 2001 under BOFS; that credit card services was merely deleted from BOFS and relocated as a component of card services w.e.f. 01.05.2006; that appellant misconceived the correct legal position by assuming that credit card services became taxable only w.e.f. 01.05.2006; that since 2001 upto 01.05.2006 and thereafter as well, credit card services was taxable; that since the .....

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t to the Board circular dated 09.07.2001 and reiterate the statutory provisions. Para 13 extracts provisions pertaining to card services and the relevant analysis is in paras 14 to 17. It was observed in para 14 that credit card services could not said to have been brought within the tax net for the first time w.e.f. 01.05.2006 on enactment of Section 65(33a) and this was taxable even earlier, since 06.07.2001 and there is thus no prospective taxation. Para 15 observes that both Finance Act, 200 .....

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on; and that this clarification does not state that credit card services became taxable only since the Finance Act, 2006 but was part of BOFS earlier as well. Para 16 observes that Finance Act, 2006 merely brought all types of cards within the definition clause so that all services provided in relation to such cards are conveniently grouped; credit card service cannot be presumed to be excluded from levy before enactment of Finance Act, 2006; and the express statutory grant in Section 65(10) rea .....

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nd the charging Section brought not only the credit card facility provided but its connected and related activities as well, to the fold of taxation. Paras 18 to 21 of the judgment do not relate to analysis relevant for our purposes; and in para 22 the conclusion is recorded, confirming the impugned adjudication order except to the extent of granting cum-tax benefit. 42. The ABN Amro Bank analyses reveals a factual misconception that the appellant had contended that credit card services was not .....

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ices during the relevant period and prior to 01.05.2006 since these are specifically enumerated in the definition of card services, only in Section 65(33a), w.e.f. 01.05.2006. The conclusion in ABN Amro Bank that the express statutory grant [in Section 65(10) read with Section 65(72), 65(105)(zzw)] takes within its fold all incidental or ancillary services in relation to credit card services, proceeds on a textual analyses and resonance to the amplitudinous expression in relation to, in the enum .....

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incidental and ancillary services which are intermediary in the use of a credit card are all covered under BOFS but there need be no apprehension that the scope of the taxable service is uncertain or perpetually inflationary. Services provided by an acquiring bank to the ME and those provided by an issuing bank to the acquiring bank apart from services provided by an issuing bank to its card holder, were alone proceeded against by Revenue for recovery of tax. It is axiomatic that the scope and .....

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ision. The several interpretative principles guide and instruct the proper interpretation to be put upon a provision. River Wear Commissioners vs. Adamson (1877) 2 App Cas 743; observed: But from the imperfection of language, it is impossible to know what that the intention is without inquiring further, and seeing what the circumstances were with reference to which the words were used, and what was the object, appearing from those circumstances, which the person using them had in view. The infor .....

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interpretation rule must be applied no matter how plain the statutory words may seem at first glance; and that the plainer the words seem, the more one must be on guard. It is for this reason that inter-alia, in the construction of an enactment, due attention should be paid to relevant aspects of the state of the law before its enactment, the history of its passing and the events and legislative developments subsequent to its passing as well; thus the pre-enacting, the enacting, and the post - e .....

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m the orders passed in several Commissionerates it is clear that quite a few, in fact several adjudicating authorities had considered the scope of credit card services as not extending to those provided by banks or financial institutions for which consideration in the nature of interchange fee or ME discount is received/ retained by providing banks. ABN Amro Bank/Royal Bank of Scotland, Standard Chartered Bank, HDFC Bank, HSBC Bank Limited, ICICI Bank, Citibank and American Express Bank had all .....

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n the enumerative provision of the Act during the relevant period, was ambiguous, uncertain and invites purposive, dynamic and strained interpretation. The express enumeration of several services falling within the ambit of card services (including credit card services) post 01.05.2006, in drafting the definition of this service in Section 65(33a) eradicates the ambiguity and uncertainty regarding scope of services covered under card services. The Circular dated 28.02.2006 issued by TRU, Ministr .....

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efinition credit card, debit card, charge card or other payment card service . The speech of the Hon ble Finance Minister on 28.02.2006 while presenting the Budget for 2006-07 explains the purposes underlying introduction inter-alia of card services. At para 153 of the speech, the Hon ble Minister states: I also propose to expand the coverage on certain services now subject to service tax. I do not wish to burden the house with the details which are available in the Budget paper. The following i .....

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65(105)(zzzw) while retaining the phrase in relation to , the phrase in any manner is added. The precision and clarity of the detailed drafting methodology employed in the Finance Act, 2006, compels the inference that Parliament not only expressed the intention to expand the scope of the taxable service to cover services provided in relation to other cards as well but has further and expressly expanded the reach of taxation to services which otherwise may not indisputedly fall within the ambit o .....

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pto specified limits; where for rendition of the service, the service provider collects joining fee, additional card fee, annual fee etc; and all these charges, including interest charges for the service rendered, form part of the value of the taxable service, in BOFS. With respect, we therefore hold that the analyses and conclusions in ABN Amro Bank are incorrect and this ruling is accordingly overruled. 46. Preliminary Objections by Revenue to hearing of the Reference: The Principal Commission .....

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an alternative remedy of an appeal (to the Supreme Court) was available against the order in ABN Amro Bank Limited. Against this decision Royal Bank of Scotland N.V. filed SLP (C) 12901 of 2014. By the order dated 08.05.2014, Supreme Court directed issue of notice on the SLP and that this SLP be tagged with SLP (C) No. CC.709/2012. The applicant further pleads that the decision in ABN Amro Bank Limited was independently challenged before the Supreme Court and is pending consideration. Revenue p .....

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r pendency of an appeal against the decision in ABN Amro Bank Limited, neither eclipses this decision nor operates as a fetter on another Division Bench, which would be free to either follow the ABN Amro Bank Limited decision or could doubt its correctness and seek interpretation, by a Larger Bench. There is also no purpose served in adjourning the reference to await the decision of the Hon ble Supreme Court. In case the ABN Amro Bank Limited decision is confirmed by the Supreme Court, that woul .....

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r to 01.05.2006. Resolution of such a conflict at the level of the Tribunal is therefore a salutary course of action, in interests of interpretative stability which would operate until an authoritative decision is received from the judgment of Supreme Court. There is also precedential guidance on this aspect. A two Member Bench of this Tribunal disagreed with an earlier decision of a special Bench of this Tribunal and referred the matter to the President for constitution of a Larger Bench of fiv .....

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fore the constitution of the Larger Bench, the President should have waited for the decision of the Supreme Court which would have been binding on all the Courts. The order of the special Bench and the order of the President referring the case to the Larger Bench were quashed for a plurality of reasons including jurisdictional. Against this order, an appeal was preferred which was allowed by the Supreme Court in Union of India vs. Paras Laminates (Pvt.) Limited 1990 (49) ELT 322 (SC). The Suprem .....

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ELT 414 (Tri. LB) specifically rejected a similar objection, also presented by Revenue i.e. to the hearing of a reference by special Bench when a decision of the earlier Division Bench was the subject matter of an appeal to the Supreme Court and was pending consideration by that Court. The decisions cited by Revenue in support of its contentions in the miscellaneous application including the decision in Union of India vs. Jaiswal Coal Company Limited (1992) 5 SCC 733 are irrelevant and do not p .....

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