No GST on Amount retained by Issuer bank as Merchant discount rate

In re The Mobile Wallet Pvt Ltd (GST AAR Maharashtra)

In fact there is one composite supply under GST, provided by the acquiring bank to the merchant establishment for which gross value of consideration is Merchant Discount Rate (MDR) which includes the interchange fee. Hence, the supply of Service of the issuing bank got subsumed into the supply of service of the acquiring bank to make it a composite supply to the merchant establishment. Merchant establishment does not have any contractual liability to pay inter change fee to the issuing bank.

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