By TIOL News Service

ALLAHABAD, MAY 02, 2014: THIS is an appeal against the order of Tribunal relating to demand of service tax. The appellant is a bank, engaged in the business of providing banking and financial services to its customers including issuance of credit cards. There is a demand of service tax under Banking and Other Financial services.

It was argued on behalf of the respondent department that the issue involved in the present case is relating to the taxability of the receipt as interchange fee received from acquiring bank for providing credit card facility. Whether such service falls within the purview of “banking and other financial services", is a question, which relates to the classification and rate of tax and, therefore, High Court has no jurisdiction to entertain such question, inasmuch as such question can only be entertained by the Apex Court in appeal filed before the Apex Court under Section 35L of the Central Excise Act, 1944.

After hearing both sides, the High Court held:

Though some of the appeals relating to the classification, rate of tax and valuation have been entertained by this Court but from the perusal of such decisions, it appears that the objection about the maintainability has not been raised by the learned counsel appearing on behalf of the Department and the same has neither been considered nor has been adjudicated. Therefore, these decisions cannot be taken as precedent on the issue.

The Karnataka High Court in the case of Commr. of S.T., Bangalore Vs. Scott Wilson Kirkpatrick (I) Pvt. Ltd. has observed as follows:

"Broadly the following disputes do not fall within the jurisdiction of High Court under Section 35(G) of the Act:-

(a) Dispute relating to the service tax payable on any service/taxable service.

(b) the value of the taxable service for the purposes of assessment

(c) A dispute as to the classification of services.

(d) Whether those services are covered by an exemption notification or not ?

(e) Whether the value of services for the purposes of assessment is required to be increased or decreased ?

(f) The question of whether any services are taxable services or not ?

(g) Whether an activity is a service rendering activity or not, so as to attract levy of service tax ?

(h) Whether a particular service falls within which heading, sub-heading of Section 65(105) of the Service Act, 1994 which defines "taxable service".

In addition to the above, the High Court has also relied on the decision of Delhi High Court in case of Ernst & Young Pvt. Ltd (2014-TIOL-263-HC-DEL-ST) and held that the present dispute relates to the classification that whether the credit card facility provided by the appellant falls within the term "banking and other financial services" and such dispute cannot be examined by the High Court and can only be examined by the Apex Court in an appeal under Section 35L of the Act.

(See 2014-TIOL-621-HC-ALL-ST)