SBI Cards & Payment Services Ltd. vs Union of India

The petitioner has lodged a challenge against the order dated 19.02.2021 (Annexure P-1) put forth by the Additional Commissioner (Appeals), which declined the petitioner’s plea for the refund of CGST & SGST totaling approximately Rs. 108 crores, incorrectly paid on 5.4.2019 (pertaining to the contested period from April 2018 to December 2018) in excess of the tax due under Section 77 of the Central Goods and Services Tax Act, 2017 (referred to as the ‘CGST Act’).

Here’s a condensed version of the facts: The petitioner operates as a joint venture with the State Bank of India (SBI), with SBI as a significant stakeholder. Its operations involve providing credit card services to customers (referred to as cardholders), and it holds proper registration with the Reserve Bank of India under Section 451 A of the Reserve Bank of India Act, 1934, designated as a non-deposit-taking and non-banking financial company.

In essence, the dispute arises from the contention that the petitioner overpaid CGST & SGST during the specified period, and the petitioner’s appeal for a refund of the excess amount has been denied by the Additional Commissioner (Appeals).

The petitioner in this case has contested an order dated 19.02.2021 (referred to as Annexure P-1) issued by the Additional Commissioner (Appeals), which denied the petitioner’s request for a refund of CGST & SGST totaling approximately Rs. 108 crores. This amount was mistakenly paid on 5.4.2019 for the period between April 2018 and December 2018, exceeding the tax liability under Section 77 of the Central Goods and Services Tax Act, 2017 (CGST Act).

The petitioner, a joint venture with the State Bank of India (SBI), operates in the credit card issuing business and is duly registered with the Reserve Bank of India as a non-deposit taking and non-banking financial company under Section 45IA of the Reserve Bank of India Act, 1934. Like many other banks, the petitioner issues credit cards to the public and is a member of Card Association, overseen by global corporations Visa and MasterCard.

Transactions occur where a credit card issued by the petitioner (at location ‘A’) is used for purchases at locations (‘B’) affiliated with other banks. These transactions are processed by Card Association servers located in Singapore, where data is collated, analyzed, and settled. Member banks are then required to make payments to each other based on these transactions.

Before the implementation of the GST regime, the petitioner had a single registration number for Service Tax, which continued initially under GST. Subsequently, the petitioner obtained separate registrations in all 28 states. However, during the initial phase, detailed transaction breakdowns were unavailable to the petitioner. Consequently, for the period between April 2018 and December 2018, the petitioner paid CGST & SGST erroneously in excess of its actual liability.

The petitioner contends that the denial of the refund is unjust, given the circumstances of the case and the complexities involved in credit card transactions across different states. They argue that they should not be held liable for the excess taxes paid due to the lack of granular transaction data during the transitional period to the GST regime.

In summary, the petitioner challenges the order refusing their refund claim, emphasizing the intricacies of credit card transactions, the lack of detailed transaction data during the transitional phase, and the unjust burden of excess tax payments imposed on them. They seek relief from the authorities in rectifying this issue and refunding the overpaid amount.

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