Case Law Details
Ramesh Kumar Patodia Vs City Bank N.A. and Ors. (Calcutta High Court)
Whether loan on credit card granted by Citibank is liable for IGST in terms of the IGST Act even when the interest on loan is exempted from IGST ?
The Calcutta High Court recently delivered a crucial judgment regarding the applicability of Integrated Goods and Services Tax (IGST) on a loan granted by Citibank to a credit card holder. The case raises questions about the relationship between the loan and credit card services and the eligibility for IGST exemption.
The case revolves around the loan offered to the appellant, who held a Citibank credit card. The bank provided a loan, which the appellant argued was unrelated to credit card services. Instead, it was an independent loan agreement. The appellant challenged the deduction of IGST on the loan and sought a declaration of exemption. The court analyzed the definition of credit card services under the Finance Act and the Notification No. 9/2017- Integrated Tax (Rate) to determine if the loan qualified as a credit card service.
The court carefully examined the nature of the transaction and highlighted that the loan was disbursed by the bank through a cheque, not by charging the credit card. It emphasized that the loan transaction had no relationship with the credit card services rendered by the bank. Therefore, the court ruled that the IGST charged on the loan was not justified, and the loan should be considered separate from credit card services.
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