IDBI BANK LTD. Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) THIS appeal arises out of Order -in -Original No. 47/BR -47/TH -I/2011, passed by the Commissioner of Central Excise & Service Tax, Thane -I. Heard the learned Counsel for the appellant and learned AR for the Revenue.

(2.) AFTER hearing for some time, it is seen that the facts in this case give rise to the issue being 'whether the commission/discount earned by the acquiring bank from the Merchant Establishment is liable to Service Tax under the category of banking and financial services for the period prior to 1 -5 -2006.'

(3.) FURTHER , in view of the contrary decision by co -ordinate Bench of this Tribunal in the case of ABN Amro reported at : 2011 -TIOL -1147 -CESTAT -DEL : 2011 (23) S.T.R. 529 (T.), the correctness of the view taken in that decision was doubted, as in the case of ABN Amro, a co -ordinate Bench of this Tribunal had held that expression "in relation to" preceding banking and financial services occurring in taxable service defined under Section 65(72)(zm) and such an expression is expansive in nature and scope, and therefore all services rendered in relation to credit card services, whether by merchant establishments, acquiring banks or others would be chargeable to Service Tax even prior to 1 -5 -2006. We respectfully disagree with the said view taken for the following reason. The expression "in relation to" qualifies only the "credit card services" and not the customer who is the service recipient nor the service provider, the issuing bank. Thus only the scope of credit card services is expanded by the said term. The credit card services comprises of a number of services such as extending credit for the purchase of goods and services, withdrawal of cash up to permissible limits, payment of utility bills, payments for travel, foreign exchange transactions and so on. All such services for which credit is given by the issuing bank would get covered under the levy. However, it does not, in any way, alter the scope of "service provider" who is the issuing bank nor the "service recipient" who is the card holder. In our considered view, all other transactions involved in operation -arising the credit card services became taxable only with effect from 1 -5 -2006 when the new entry relating to "credit card, debit card charge card or any other payment card service" was brought under the tax net vide Section 65(33a) read with 65(105)(zzzw). Accordingly, as the correctness of the earlier decision in ABN Amro was doubted in the case of Commissioner of Service Tax v. HDFC Bank Ltd. (supra) and the matter was referred to Larger Bench on the following points of law for consideration: -