Banks approach Delhi HC against ₹38,000 crore service tax demand

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Thirteen banks have moved Delhi High court against a government demand for service tax to the tune of ₹ 38,000 crores. Their claim is that the government has taken an arbitrary decision on the service tax, which is being charged from the banks by multiplying the penalty imposed on them with the total number of accounts held with the respective banks. These banks include the State Bank of India, Punjab National Bank, Yes Bank, HDFC, Hong Kong and Shanghai Bank among others. A division bench comprising of Justice S Muralidhar and Justice Talwant Singh has issued a notice to the Centre, the Central Board of Indirect Taxes and Customs, the Goods and Services Tax Council, and other authorities.

“Today the Court is assured on behalf of the Petitioners that the replies to the impugned SCNs will be filed by them without prejudice to their rights and contentions on or before 31st August 2019. The Court further directs that the proceedings pursuant to the impugned SCNs will continue in accordance with the law, but no final orders of adjudication will be passed till the next date of hearing,” the order reads. The demand made from the banks by the government is for “treating the commitment of customers to maintain minimum average balance (MAB) in bank accounts as consideration for banking facilities provided free”. The next date of hearing is on 14 November.

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