Commissioner Of Gst And Central Excise vs M/S Citibank N.A

The Supreme Court held that under Clause (iii) of Section 65(33a) of the Finance Act, 1994, service tax is applicable only on the Merchant Discount Rate (MDR) and not separately on the interchange fee charged by the issuing bank. The Court affirmed that the acquiring bank's payment of service tax on the full MDR suffices, as there is no loss of revenue to the government. The judgment clarified that the legislative intent was to avoid double taxation and ensure ease of tax collection.