HDFC Bank Ltd. Vs Commissioner of CGST & Central Excise (CESTAT Mumbai)
Summary: The Customs, Excise & Service Tax Appellate Tribunal, Mumbai Regional Bench, considered five appeals filed by HDFC Bank Limited against three Orders-in-Original dated 29.11.2013, 14.12.2015 and 14.12.2017. The common dispute concerned the liability to service tax on “interchange fee” earned by the appellant bank in credit-card transactions for different periods covering September 2006 to March 2016.
The appellant was engaged, among other activities, in providing “Banking and Other Financial Services” and was registered under the service-tax regime. During an EA-2000 audit, the Department noticed that HDFC Bank had earned interchange fee from credit cards issued by it. The Department treated the interchange fee as consideration for credit-card services and proposed service-tax demands under Section 73(1) read with Section 68 of the Finance Act, 1994, together with interest and penalties under Sections 76, 77 and 78.
The adjudicating authority in the first impugned order held that the acquiring bank rendered services to the merchant establishment, while the issuing bank rendered a separate service to its card holder. It concluded that the interchange fee received by the issuing bank represented consideration for the service of authenticating and facilitating the card transaction and therefore was exigible to service tax. The Department’s case also rejected the appellant’s contention regarding double taxation.
Before the Tribunal, HDFC Bank relied upon earlier decisions including Citi Bank N.A. Vs. Commissioner of GST and Central Excise, Final Order No. 42902 of 2018 dated 05.08.2020, and ABN Amro Bank NV Vs. Commissioner of Central Excise & Service Tax, Noida, Final Order No. 71601 of 2018 dated 23.07.2018. The appellant also submitted that the earlier Citi Bank matter had subsequently been finally decided by the Supreme Court on 16.10.2024 after the divergence of opinion had been referred to the Chief Justice of India. The Revenue, on the other hand, reiterated the findings in the impugned orders.
