Legal Question in Banking Law in India

I have credit card. I used it at best satisfactory.A credit card bank recovered 3.5 % interest on outstanding balance.They also recovered Late payment charges.They also recovered service tax assessment @10.30% on interest as well as on late payment charges.Due to late payment charges the limit of card is exceeds so they now charges Rs.500/ + service tax.

My questions is......1. can a bank recover service tax on late payment charges and exceeds limit

2. can bank recover service tax under the Head of "service tax assessment"

3. who is liable to pay service tax to govt. a card holder or bank ?


Asked on 6/30/10, 6:44 am

3 Answers from Attorneys
Pravin Vaidya Independent

1. Yes

2. Yes

3. Customer

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Answered on 6/30/10, 10:44 am
J. Radhakrishnan independent Practice

when u use credit card, you become liable for all the charges mentioned in the brochure of the card issuing agency. service charge is collected from the customer just like sales tax. Better avoid using credit card and plan your expenses depending on the money you have in your pocket.

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Answered on 6/30/10, 7:36 pm
Sudershan Goel India Law Offices of Sudershan Goel - Advocate

Though legally the service provider is to pay service tax, however, he may charge the same from the consumer depending upon execution of appropriate agreement.

Therefore, if the bank has obtained your signatures on an agreement fastening upon the liability of service tax, you may be liable to make payment.

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Answered on 7/01/10, 4:48 am


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