9911796707
TMI Blog2023 (7) TMI 1102X X X X Extracts X X X X X X X X Extracts X X X X ..... nt payee cheque. The date of advancement of loan was 2nd March, 2019. The equated monthly instalment (EMI) amount was Rs.58,050/-. From the statement enclosed by the appellant at Pg. 68A of the paper book, it appears that with the payment of EMIs, the interest amount in each EMI gradually reduced. At the start, the interest amount in the first EMI was Rs.7,041.44/-. In the last EMI, the interest amount was Rs.621.98/-. The principal amount was adjusted accordingly so that in the last EMI the principal amount was shown as Rs.57,434.02/-, interest Rs.621.98/- resulting in the last EMI of Rs.58,056/-. In respect of the appellant's credit card, monthly statements were issued where this loan and the EMI payable thereon were indicated. On 16th May, 2019 the bank received a letter dated 13th May, 2019 from the appellant challenging the deduction of the said amount on account of IGST. The entire amount of loan has been repaid to the bank by him together with interest and IGST. By this writ application, the appellant has sought a declaration that the transaction between him and the bank was exempted from the levy of IGST and that no amount on that account should have been charged and if c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any other person (hereinafter referred to as the issuing bank), issuing such card to a card holder; (ii) by any person to an issuing bank in relation to such card business, including receipts and processing of application, transfer of embossing data to issuing banks personalisation agency, automated teller machine personal identification number generation, renewal or replacement of card, change of address, enhancement of credit limit, payment updation and statement generation; (iii) by any person, including an issuing bank and an acquiring bank, to any other person in relation to settlement of any amount transacted through such card. Explanation- For the purpose of this sub-clause, "acquiring bank" means any banking company, financial institution including nonbanking financial company or any other person, who makes the payment to any person who accepts such card (iv) in relation to joint promotional cards or affinity cards or cobranded cards (v) in relation to promotion and marketing of goods and services through such card: (vi) by any person, to an issuing bank or the holder of such card, for making use of automated teller machines of such person; and (vii) by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements of account. The following contentions were made by the respondent bank: The bank had entered into a contract with the appellant where it was provided that there would be levy of Integrated Goods and Service Tax on the interest charged. This condition regarding levy of the said tax was accepted by the appellant. He had accepted the equated monthly instalments, the number of instalments and the amount in each instalment, monthly interest and the said tax thereon. The appellant was granted loan because he was a credit card holder. Granting of this loan was part of the credit card services being rendered by the bank to the appellant. The respondent No. 4, the Central Government made the following submissions:- Integrated Goods and Services Tax (IGST) is payable on rendering of inter State goods and service. The particular service of grant of loan was made by the respondent bank from Tamil Nadu to the appellant in Kolkata for which IGST is leviable. Thereafter, learned counsel placed the IGST Act, 2017 in the greatest detail to show how this kind of service of providing loan was exigible to service tax. He referred to the notification dated 28th June, 2017 which exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viewed as a kind of service charge for advancing loan to the appellant. Hence, the said tax was payable thereon. Now, by the 28th June, 2017 notification this kind of service with one exception "Interest involved in credit card services" was exempted from imposition of this tax. The terms and conditions on which the loan was granted to the appellant inter alia stated that it was only available to holders of Citi bank credit cards issued in India. Further, it was exigible to IGST. Mr. Patodia applied for this loan according to those terms and conditions. The question is whether this transaction was a credit card service? Whether the IGST charged by the bank was rightly done? If not, is the appellant entitled to refund? Credit card service has not been defined in the IGST Act, 2017. A good way to proceed would be to apply the definition of "credit card services" in the Finance Act, 2006 amending Section 65(33A) of the Finance Act, 1994. It was conceived of a service provided by a banking company or a financial institution or a non-banking financial company or institution issuing a card to a card holder. It also extended to such institutions settling any amount "transacted thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute is whether the loan granted to credit card holder is loan simpliciter or an additional facility provided with the credit card. It is the contention of the Appellant that loan granted has no relation with credit card services. It is further contended by the Appellant that he did not utilize the loan but while making the payment of loan he did the same through credit card. It is contended by the respondent City Bank that the Appellant had accepted the condition of payment of Goods and Service Tax at the time of accepting the Loan, thus he cannot retreat from such acceptance. It is a well settled principle of law that mere acceptance of a condition prohibited by law does not make the said condition, enforceable in law. Thus at the very outset it is necessary to decide as to whether loan granted to a holder of credit card is a facility annexed to the credit card or a loan simpliciter. Upon reading of the definition of Credit Card Services as provided in Section 65 (33A) of the Finance Act 1994 no where it will appear that credit card services include loan given to a Credit Card holder. Further upon perusal, of the Notification No. 9/2017. Integrated Tax (Rate) issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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