CITI Bank N.A. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
Summary: The Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench, Chennai, considered the taxability of interchange fees received by a credit-card issuing bank from acquiring banks under the taxable category of Credit Card Services. The appeal arose from a common Order-in-Original No. CHN-SVTAX-001-COM-71 to 74/2016-2017 dated 24.1.2017, by which the adjudicating authority confirmed service tax liabilities and penalties against the appellant for the period October 2007 to March 2015.
The case arose during audit of the appellant’s accounts. The Department examined the credit-card transaction mechanism involving issuing banks, acquiring banks, merchant establishments and card networks such as MasterCard, Visa and Diners Club International. The Department treated the interchange fee received by the issuing bank as consideration for services connected with credit-card transactions. During October 2007 to June 2012, the appellant had received interchange fee of Rs.6,04,28,07,230/-, on which service tax was worked out at Rs.65,53,24,371/-. The appellant had, on its own accord, paid Rs.15,00,00,000/- towards service tax during the proceedings.
Four show-cause notices covering October 2007 to March 2015 alleged service tax liability on interchange fees under the taxable entry for Credit Card Services. The total amount involved in the notices was stated to be Rs.1,64,28,86,059/-, together with interest and penalties.
