A two-judge bench of the Delhi High Court, on Monday agreed to hear a petition filed by 13 banks against the tax department challenging notices imposing 38,000 crore as service tax on minimum balance.
Show cause notices were issued to banks demanding tax from the banks for “treating the commitment of customers to maintain minimum average balance (MAB) in bank accounts as a consideration for banking facilities provided free.
The bench comprising Justices S Muralidhar and Talwant Singh admitted the petition and issued notice to the central government, the Central Board of Indirect Taxes and Customs (CBIC), the Goods and Services Tax Council, and other authorities.
The matter was posted to 14th November. However, the show-cause notices issued by the government has been stayed by the Court till further hearing.
A total of 13 banks had approached the high court claiming that the government had arbitrarily decided on the service tax to be charged from them by multiplying the penalty imposed by the banks with the total number of accounts held with the bank.
Some banks, such as HDFC Bank Limited are facing a penalty of up to Rs 18,000 crore. The total amount, if the interest and penalty are both included, could reach up to Rs 60,000 crore, the advocate said.
Other than the Delhi High Court, a similar petition by three banks is pending before the Madurai Bench of the Madras High Court.
Advocates N. Venkataraman, Senior Advocate with Mr Sudipta Bhattacharjee, Mr Onkar Sharma, Mr Harsh Makhija and Mr Ariyadeep Roy appeared for the petitioners.
