Vijaya Bank wins appeal exempting service tax on Member Support Services. Interpretation of Finance Act key.

The tribunal allowed the appeal in favor of M/s. Vijaya Bank, ruling that they were not liable to pay service tax for providing Member Support Services and connectivity services to Member Banks under the category of Banking and Other Financial Services. The decision was based on the interpretation of Section 65(12) of the Finance Act, 1994, and previous tribunal decisions supporting the exclusion of credit card services from the scope of taxable services.

---

---

Issues involved:
1. Whether M/s. Vijaya Bank is liable to pay service tax for providing Member Support Services and connectivity services to Member Banks under the category of Banking and Other Financial Services (BOFS).
2. Interpretation of Section 65(12) of the Finance Act, 1994 regarding credit card services.
3. Application of Rule 2(1)(d)(iv) of Service Tax Rules, 1994 for recovery of service tax.
4. Confirmation of service tax liability by the Joint Commissioner and Commissioner (A).
5. Relevance of previous tribunal decisions in similar cases.

Detailed Analysis:
1. The appellants, M/s. Vijaya Bank, were engaged in providing taxable services under BOFS and were alleged to have an agreement with VISA for providing Member Support Services and connectivity services to Member Banks. The issue was whether they were liable to pay service tax amounting to Rs. 16,82,771 for the period from 6.8.2002 to 30.9.2006. The Joint Commissioner and Commissioner (A) confirmed the service tax liability, leading to the present appeal.

2. The appellants contended that the interpretation of Section 65(12) was crucial, especially concerning credit card services. They argued that with effect from 1.5.2006, credit debit card services were elaborated, and the issue was settled by previous tribunal decisions. They referenced the case of CCE vs. M/s. Vijaya Bank & M/s. Canara Bank and the decision in the case of Standard Chartered Bank & Ors. vs. CST to support their claim that credit card services were specifically included as a separate service in the Finance Act, 2006, and were not inherently subsumed within the purview of credit card services defined in Section 65(10) or (12) as part of the BOFS.

3. The learned DR agreed with the decision of the Larger Bench, which settled the issue in favor of the appellants, further supporting their argument regarding the interpretation of credit card services under the Finance Act, 2006.

4. Consequently, the tribunal allowed the appeal in favor of M/s. Vijaya Bank, emphasizing the relevance of previous tribunal decisions and the interpretation of the Finance Act, 2006, in determining the liability for service tax under the BOFS category.

This detailed analysis highlights the key legal issues, interpretations of relevant sections, application of service tax rules, confirmation of liability by authorities, and the impact of previous tribunal decisions on the final judgment.

---