Service tax on card-issuing bank for interchange fees: SC Delivers Split Verdict

Commissioner of GST And Central Excise Vs Citi Bank N.A. (Supreme Court of India)

Issue- Whether Interchange fees received out of Merchant Discount Rate(MDR) by the issuing bank from accepting bank in relation to credit card transactions carried on a customer is liable to be taxed to service tax in the hands of the bank collecting such interchange fees?

A Division Bench of the Supreme Court took a divergent view on the issue, whether the card-issuing bank charging an interchange fee for credit card  transaction is to be subjected to service tax for the same. Now probably a larger bench will be constituted to settle the issue.

Held by K.M. JOSEPH, J.

109. Therefore, the upshot of the above discussion is as follows:

Please become a Premium member. If you are already a Premium member, login here to access the full content.