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The Commissioner of Central Excise and Service Tax Versus M/s. Vijaya Bank, M/s. Canara Bank

2016 (11) TMI 61 - CESTAT BANGALORE

Levy of service tax - commission received by the Banks on credit card transactions - Banking and Other Financial Services - Held that: - the matter stands decided by the decision of the Larger Bench in the case of Standard Chartered Bank vs. CST, Mumai-I [2015 (8) TMI 686 - CESTAT DELHI (LB)] where matter was decided in favor of assessee. - Introduction of comprehensive definition of credit card, debit card, charge card or other payment service in Section 65(33a) read with Section 65(105)(zz .....

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ices enumerated in these sub-clauses are not implicit in the scope of credit card services. - 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. - ME discount, by whatever name called, representing amounts retained by an acquiring bank from out of amounts recovered by such bank for settlement of payments to the ME does n .....

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Commissioner of Central Excise and Service Tax, Large Taxpayers Unit, Bangalore, dropping the demands of service tax on commission received by the Banks on credit card transactions. 2. Revenue has challenged the orders before us. The brief facts are given below: (i) Respondent-Banks are engaged in providing taxable service under the category of Banking and Other Financial Services as defined in Section 65(12) of the Finance Act, 1994. The respondents inter alia provide credit card services to i .....

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for payment, where upon the assessee reimburse the amount less a certain percentage of discounts which is retained by the bank. The discount rate is determined by the bank. (ii) Each transaction by the card holder in the aforesaid manner entails reimbursement by the assessee to the merchant establishment, with a discount which accrues to the bank. The assessee is liable to pay service tax on the credit card services provided by them on the value of discount/commission retained by the banks which .....

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e assessee does not render any taxable service/credit card service to merchant establishment or other banks as the credit card holder is the actual recipient of the service and hence the discount/commission received from merchant establishment/banks does not constitute value of taxable services. It was pointed out that credit card/debit card/charge card/other payment card service was given the status of separate category of taxable service with effect from 1.5.2006 by the Finance Act, 2006 and t .....

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respondent-Banks. 3. The learned CA appearing for the respondent-Banks submitted that the credit card services were specifically included as a separate service only w.e.f 1.6.2005. Revenue seeks to levy service tax by including such services under Banking and Other Financial Services (BOFS) for the earlier period. She further submitted that the matter stands decided in their favour by the decision of the Larger Bench in the case of Standard Chartered Bank vs. CST, Mumai-I vide Interim Order No. .....

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