2018 (7) TMI 1750 - AT - Service Tax

Banking company wins appeal against service tax demand for credit card services.

M/s ABN Amro Bank NV (Presently known as Royal Bank of Scotland NV) Versus Commissioner, Central Excise, Customs & Service Tax, Noida

M/s ABN Amro Bank NV (Presently known as Royal Bank of Scotland NV) Versus Commissioner, Central Excise, Customs & Service Tax, Noida - TMI Issues:1. Appellant's appeal against the demand of service tax, interest, and penalties.2. Applicability of service tax on the amount received by the appellant.3. Interpretation of the definition of 'Credit Card Services' under Section 65(33A).4. Invocation of the extended period of limitation for issuing the show cause notice.Analysis:1. The appellant contested the demand of service tax, interest, and penalties imposed by the impugned order. The demand was raised for the period from May 2006 to February 2008 by invoking the extended period of limitation. The appellant, a banking company engaged in issuing credit cards, argued that since the acquiring bank had already paid service tax on the entire amount, no additional tax was payable by them.2. The appellant's counsel contended that the amount received by the appellant did not fall under the category of 'Credit Card Services' as per the relevant provisions of the Finance Act, 1994. Referring to a previous case, the appellant highlighted that a Larger Bench of the Tribunal had ruled in favor of no service tax liability for a similar activity. The appellant also emphasized that the show cause notice issued in 2011 was time-barred as the audit took place in 2007-2008.3. The Tribunal examined the definition of 'Credit Card Services' under Section 65(33A) of the Finance Act, 1994. It was noted that for an activity to be classified under credit card services, there must be a commission received in relation to the settlement of any amount. The Tribunal observed that the appellant, acting solely as an issuing bank and not involved in settlement activities, did not qualify for the credit card services category. This interpretation led to the conclusion that the demand against the appellant was not sustainable.4. Regarding the invocation of the extended period of limitation for issuing the show cause notice, the Tribunal referred to a Supreme Court decision and held that since the appellant's activity was known to the Department earlier, the extended period of limitation was not applicable. Citing the Supreme Court's ruling in a similar case, the Tribunal determined that the demand was highly time-barred.In conclusion, the Tribunal set aside the impugned order, allowing the appeal of the appellant with any consequential relief deemed necessary.