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GST is not applicable on Amount retained by issuer bank in form of "merchant discount rate"

Shanti Prime Publication Pvt. Ltd.

Advance Ruling— the applicant, seeking an advance ruling in respect of the following questions:

1) Whether the portion of the Merchant Discount Rate received by the issuing Bank as 'Interchange Fee' is liable to tax under the Goods and Service Tax?

2) Why different practice prevails by the Network in the industry?

Held that—
We find from the statement of facts pertaining to first question Merchant Discount Rate is the rate charged by Acquiring bank from Merchant on every card transaction. This MDR is as per agreement between Acquiring Bank and Merchant Establishment. From a perusal of transaction it is clear that applicant is neither a supplier nor a recipient and the questions raised is not in relation to the supply of goods or services or both, being undertaken or proposed to be undertaken by the applicant and as such by virtue of Section 95 the applicant cannot make an application before this authority.

With respect to question No. 2 above, we clearly find that the question is not on matters or questions specified in section 97(2) of the Act and as such is inadmissible under section 97 (2) of the Act.—The Mobile Wallet Pvt Ltd., In Re…. [2019] 08 TAXLOK.COM 077 (AAR-Maharashtra)

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