TMI Blog2015 (11) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... ere will necessarily be a charge for conversion of currency. The card holder is settling his dues with appellant only in rupees. The card is used for payment in foreign exchange. As such the mark up charge is directly attributable to the conversion of currency. This much is clear from the terms of usage and the card holder is also aware of the nature of mark up. The case of Revenue is that since card is an instrument which only enables such conversion of currency, hence any mark up collected on this account is leviable to tax as credit card service. - mark up charges accruing to the appellant when card holder uses card to pay in foreign exchange abroad is not liable to service tax under ‘Credit Card Services’ during the impugned period. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 1994. Aggrieved by this order the appellant is before us. 4. Ld. Counsel for the appellant, Shri B. L. Narashimhan, submitted that out of two issues involved in the present appeal, the question of service tax liability on interchange income has been settled in their favour by the larger Bench of the Tribunal in the case of Standard Chartered Bank and others 2015-TIOL-1713-CESTAT-DEL-LB. The ld. AR Shri Amresh Jain agreed with the said submission of the appellant. As such we find that the service tax liability confirmed in the impugned order on this income is not sustainable. The ld. Counsel informs that tax amount of ₹ 6,13,44,046/- is attributable to this category of income out of total confirmed tax demand of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the foreign currency cannot be taxed under credit card services. The appellant while issuing card or on periodical basis collects certain service charges in respect of international cards. The service tax on such service charges stands discharged. Thus the use of card in international transaction is enabled by the appellant. However, when card holder uses card to pay in foreign currency for any goods/ services abroad this will necessarily involve conversion of the foreign currency. In the absence of card, such conversion has to be made by the card holder by other means like money changers etc. The card usage helps to facilitate payment to goods/ services with simultaneous conversion of currency. The appellant is already collecting service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onversion in foreign currency is enabled by usage of card and such the revenue accruing to appellant is relatable to card services only. He further contended that the larger Bench of the Tribunal (supra) followed the ratio that charges for provision of any service between the issuing bank and card holder falls under the taxable entry of BOFS during the relevant period. 10. We have heard both the sides and examined the connected appeal papers. The point for decision is tax liability of income accruing to appellant as mark-up when card is used for foreign exchange payment. Credit Card Services is one of the services taxed under Banking and Financial Services introduced with effect from 16.07.2001. The term Credit Card Services was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersion of currency. This much is clear from the terms of usage and the card holder is also aware of the nature of mark up. The case of Revenue is that since card is an instrument which only enables such conversion of currency, hence any mark up collected on this account is leviable to tax as credit card service. As discussed above the mark up comes only when currency exchange is involved. If not using the card the card holder will be spending certain charges to convert the currency through any other means. As discussed in the larger Bench decision of this Tribunal (supra) the Finance Act, 1994 has not defined, even illustratively, the nature and variety of services which amount to credit card services. The larger Bench of Tribunal in agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered and consumed abroad. As Hon'ble Supreme Court in the case of Ishikawa-Ima-Harima Heavy Industries Ltd. 2007 (6) STR 3 (SC) held that in respect of offshore services, there should be sufficient nexus between the rendition of services and territorial limits of India. It was held that applying the principle of apportionment to composite transactions which have some operation in one territory and same in other, it is essential to determine taxability of the service operations. Applying this principle, we find even if alternate argument of Revenue is considered, in the present case the whole of service rendered and consumed outside India is beyond the taxable territory as per Finance Act, 1994. 13. Considering the above discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
