AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 909
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....iated against the appellant to demand service tax on the following categories of income linked to credit card business: a) revenue generated from 'interchange' - the differential amount generated by the appellant for funding the receivables. b) revenue generated in the name of mark-up amount over and above the official conversion rate when credit card is used abroad by the card holder. 3. The Commissioner, Service tax, New Delhi vide his order dated 10.02.2009 confirmed the demand of service tax and imposed penalties under Section 78 of Finance Act, 1994. Aggrieved by this order the appellant is before us. 4. Ld. Counsel for the appellant, Shri B. L. Narashimhan, submitted that out of two issues involved in the present appeal, the que....
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....ant. The Revenue contended that the said mark-up income was in relation to the 'credit card service' covered under the category of taxable service 'Banking and other Financial Services' during the period 16.07.2001 to 30.04.2006. 7. The ld. Counsel for the appellant submitted that the transaction involved in the card holder using the card for payment to a foreign party involves two elements viz: (a) usage of the credit card outside India and (b) the conversion of foreign currency. He contended that the mark up on conversion of the foreign currency cannot be taxed under credit card services. The appellant while issuing card or on periodical basis collects certain service charges in respect of international cards. The service tax on such ser....
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....rsion of foreign currency and not credit card service. They also believed that the services having been rendered outside India are not taxable. 9. The learned AR Shri Amresh Jain submitted that the mark up charges are collected from the card holder by the appellant and are directly attributable to use of credit card. He further stated that the provider/ receiver of service were ordinary resident of India and the consideration for service is settled in India in rupees. Hence, the service is in taxable territory only. The conversion in foreign currency is enabled by usage of card and such the revenue accruing to appellant is relatable to card services only. He further contended that the larger Bench of the Tribunal (supra) followed the ratio....
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....tion. 11. It is an admitted fact that when card is issued with international credit facility, service charges collected at that time or on periodical basis are subjected to service tax under credit card service. When such card is used to pay in foreign exchange outside India there will necessarily be a charge for conversion of currency. The card holder is settling his dues with appellant only in rupees. The card is used for payment in foreign exchange. As such the mark up charge is directly attributable to the conversion of currency. This much is clear from the terms of usage and the card holder is also aware of the nature of mark up. The case of Revenue is that since card is an instrument which only enables such conversion of currency, he....
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....ould be taxed in the jurisdiction of its consumption. Here, the service, namely facility of use of card for payment, is rendered outside India and duly consumed by the recipient-card holder outside India. We find service tax liability on such service is not sustainable for want of jurisdiction. Even if it is considered, conceding the plea of revenue that the card is issued in India and the service availed abroad is in continuation of such card usage, it is clear that the identified service element has been wholly rendered and consumed abroad. As Hon'ble Supreme Court in the case of Ishikawa-Ima-Harima Heavy Industries Ltd. 2007 (6) STR 3 (SC) held that in respect of offshore services, there should be sufficient nexus between the ....