Case Title | Ramesh Kumar Patodia vs Citi Bank Na and Ors. |
Court | Calcutta High Court |
Honorable Judges | Justice Hiranmay Bhattacharyya |
Citation | 2022 (6) GSTPanacea 109 HC Calcutta WPO 547 of 2019 |
Judgement Date | 24-June-2022 |
Council for Petitioner | Romendra Kumar Biwas Ujani Pal |
Council for Respondent | Prabhat Kumar Srivasatawa K. K. Maiti Rajesh Kumar Shah |
Section | Serial No 28 notification dated June 28 2017 |
In Favour of | In Favour of Respondent |
The Calcutta High Court bench of Justice Hiranmay Bhattacharyya has held that Bank in extending the loan in question is nothing but a service pertaining to the said credit card interest involved in credit card services which is not exempted by notification no. 9/2017- Integrated Tax (Rate) dated June 28, 2017.
Facts of the Case
This Writ petition praying for a declaration that the interest component of the Equated Monthly Instalments (for short “EMI”) of the loan granted by the respondent Bank is exempted from levy of Integrated Goods and Service Tax (for short “IGST”) and for a direction upon the Bank and the IGST authorities to refund the IGST collected from the petitioner
Petitioner is holder of a valid Citi Bank Credit Card issued by the respondent no. 1/Bank. He received an email communication on 21.02.2019 from the Bank offering an instant loan of Rs. 6,50,000/- at 13% interest above the credit limit. A similar email communication was also received on 28.02.2019. Petitioner expressed his willingness to the said offer by a SMS communication on 28.02.2019. On 02.03.2019, petitioner received an email communication from the Bank that a loan on his credit card has been disbursed and is repayable in EMIs along with an additional initial interest amount. Thereafter a demand draft of Rs. 6,50,000/- was dispatched to the home address of the petitioner and he encashed the said draft. Upon receipt of the credit card statements of two successive periods, the petitioner detected that IGST @ 18% was charged on the initial interest as well as interest component of EMI. Petitioner by several letters protested against charging of IGST on the interest component of the EMI and requested the Bank to reverse the said IGST charges.
Court Held
Considering the facts as recorded, held that the said offer was valid only for customers holding a Citi Bank Credit Card issued in India and who avail of a loan on their card digitally. Bank in extending the loan in question is nothing but a service pertaining to the said credit card.
that the services rendered by the bank by way of extending loans to the petitioner in the instant case amounts to credit card services, the interest component of EMI of the said loan is nothing but interest involved in credit card services which is not exempted by notification no. 9/2017- Integrated Tax (Rate) dated June 28, 2017.
Analysis of the Judgement
Upon a plain reading of the notification dated June 28, 2017 it is evident that the interest involved in credit card services is not exempted. Thus, the said decision is of no assistance to the petitioner in the instant case.
It is evident from the offer of loan that the same was not an offer to all intending borrowers but was restricted to a particular category of persons holding the Citi Bank Credit Card. The criteria for processing the loan, the manner in which the EMI of loan is reflected in the Credit Card statements and the charging of interest in case there is a shortfall in the payment of the amount due as well as the mode of payment all goes to prove that the service rendered by the Bank in extending the loan in question is nothing but a service pertaining to the said credit card.
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