SC Judgment on Credit Card Interchange Fees- A Roleplay

Episode Duration:
55 minutes

Episode Background:
After a 3-day long hearing argued by Sr. Advocate Arvind Datar and ASG Balbir Singh, the judges on the Division Bench of the Hon'ble Supreme Court agreed that interchange fee is a taxable service covered by the taxing entry for credit card services and under the negative list; however, dissented on certain aspects [TS-542-SC-2021-ST]. The dissenting judgment of Justice Bhat highlights certain interesting positions in law while applying the same to a complex transaction that takes place on the technological platform of a card network (Visa, Mastercard etc.). On the other hand, both judges agree that once tax is already paid on interchange fees in the hands of the acquiring bank, it cannot once again be taxed in the hands of the issuing bank since that would lead to double taxation.

While the final word on this issue of whether interchange fees is taxable in the hands of the issuing bank is yet awaited from a third / larger bench, the judgment provides necessary guidance on the requisite evidence that issuing banks would be well-advised to maintain.

What shall the episode cover?
Against this backdrop, Taxsutra and Economic Laws Practice (ELP) present an episode on “Supreme Court Judgment on Credit Card Interchange Fees - A Roleplay". In this episode, ELP Partner Mr. Nishant Shah and Associate Partner Ms. Sweta Rajan shall:
 

Key Highlights

1. Thoroughly dissect the issues/impact of the aforesaid ruling
2. Share their first-hand experience of appearing during the hearings alongside Sr. Advocate Arvind Datar
3. Discuss the challenges that face issuing banks - viz. key issues, arguments advanced by the assessee and the service tax department, the potential consequences of the judgment on similar demands raised on other banks under BFS, CCS and the Negative list regime.