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CESTAT, BANGALORE BENCH
Canara Bank
v.
Commissioner of Central Excise and Customs (LTU)
Stay Order Nos. 975/2012
Stay Application No. 1927/2011
Service Tax Appeal No. 3083/2011
Date of pronouncement – May 30, 2012
The bank’s customers holding credit cards purchase goods from shops and the bank pays to the shop keeper on their behalf. Till the customers pay up the money to the bank, they are debtors and they stand in the shoes of borrowers. If that be the case, the amount transacted is a “loan” and interest must accrue to the bank in the event of delay in repayment thereof. In this scenario, the legal provisions cited by the learned counsel become relevant. During the period of dispute, “interest on loans” was in the excluded category and was not to be included in the gross value charged by the bank for rendering ‘credit card services’.
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