CESTAT Mumbai issues rulings on Tata Communications and banking service taxes

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Mumbai has issued several rulings regarding the classification of services for tax purposes.

In a case involving Tata Communications Limited, the tribunal ruled that transponder services from foreign satellite service providers are not taxable as Business Support Services (BSS). The company argued that the capacity leased from foreign providers constituted telecommunication services rather than infrastructural support services. The tribunal upheld the decision to drop service tax proceedings that had previously sought significant sums in tax, interest, and penalties.

In separate rulings, the Mumbai Bench addressed banking services. It determined that services provided by DBS Bank’s Indian branch to its Singapore head office for External Commercial Borrowing (ECB) loans do not constitute “intermediary services,” as the branch and head office are the same legal entity. Additionally, the tribunal ruled that HDFC Bank is not required to pay separate service tax on credit card interchange fees if tax has already been applied to the entire Merchant Discount Rate (MDR).