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TMI Blog2009 (4) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... them u/s 78 of the Finance Act '94 (the Act) and applicable interest. Vide the impugned order, the Commissioner found that the applicants had charged holders of its credit cards and debit cards a mark up of about 3% on the amount in rupees involved in the purchase of goods or services in foreign currency made abroad using the cards issued by the appellants. These charges were collected while setting the dues of the cardholder for his/her cross border purchases with the clearing establishment (VISA/Mastercard) which paid the acquiring bank the amount it incurred towards settling the dues of the cardholder with the merchant establishment concerned. Citibank did not pay service tax on these charges during 1-7-01 to 30-4-06. In the cardholder' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause (viii) of Section 65(12) of the Act w.e.f. 10-9-04. In view of the finding of suppression by Citibank the Commissioner imposed penalty of Rs. 5.15 crores on them u/s 78 of the Act. 3. In the appeal before the Tribunal it is argued that mark up is a result of the method of arriving at the foreign exchange rate in order to recover the cost of the goods/services purchased abroad. The service involved was more appropriately "purchase and sale of foreign currency including money changing" introduced in the Act in Section 65(12)(a) clause (iv) w.e.f 16-5-08. The entry "credit card, debit card, charge card or other payment cards related service" of Section 65(33a) which covers services provided by an issuing bank "to any other person in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Credit Card Service" of clause (ii) of "Banking and Other Financial Services" of Section 65(12)(a) of the Act during the material period. Unless the debit card holder has an account with the issuing bank, transactions with the debit card is not possible. The holder of debit card is enabled to operate his account for transactions across the border only since he has an account. Hence the demand under "Operation of accounts" is also, prima facie, sustainable. The plea of limitation is arguable as Citibank had intimated the department the fact of their charging mark up where transactions in foreign exchange were involved vide their letter dated 4-12-03 and as Ministry in its clarification dated 9-7-01 did not specify mark up as one of the cha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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