GST | Delhi High Court Grants Interim Relief To ICICI Bank Over Demand Of ₹216 Crores For Minimum Balance Non-Maintenance Charges
In yet another writ petition by ICICI Bank, the Delhi High Court has granted interim relief to ICICI Bank in a demand pertaining to charged levied by the Bank for not maintaining a Minimum Average Balance (MAB). As is the norm in the banking sector, while opening a bank account, the customer signs an Account Opening Form post which the banking relationship is activated. One of...
In yet another writ petition by ICICI Bank, the Delhi High Court has granted interim relief to ICICI Bank in a demand pertaining to charged levied by the Bank for not maintaining a Minimum Average Balance (MAB).
As is the norm in the banking sector, while opening a bank account, the customer signs an Account Opening Form post which the banking relationship is activated. One of the conditions set out in the Form is that the customer must maintain a MAB in its account.
The genesis of taxability of MAB is rooted in the pre-GST regime. In 2019, a cumulative demand across the banking sector close to INR 60,000 crores pertaining to the erstwhile service tax regime is pending before the Delhi High Court. (Read More here)
With the advent of GST, the Petitioner- Bank was treating penal charges for non-maintenance of MAB as banking service supply taxable at 18% GST, which was duly deposited.
A Show Cause Notice was issued by the Additional Commissioner of CGST, Mumbai East Commissionerate whereby approximately ₹216 crores was demanded as GST for alleged short payment on services provided to customers for not maintaining specified minimum balance.
The Department alleged that Bank committed to provide additional services / facilities (like issuing cheque book, pass-book, free ATM withdrawals, etc.) to the customers in lieu of the customers committing to maintain the MAB. This commitment by the Bank, to provide services was in the nature of 'agreeing to do an act' and constituted as 'consideration', falling under the periphery of 'Supply of Service' in terms of Section 7 read with Entry 5(e) of Schedule II of the CGST Act, 2017, the Department argued.
Recently, a Division Bench comprising, Justice Prathiba Singh and Justice Renu Bhatnagar while admitting the writ petition clarified the following:
“The SCN may be adjudicated but if the final orders are passed, the same would not be implemented.”
Senior Advocate Tarun Gulati along with others appearing for the Bank had assailed the Show Cause Notice on several grounds including Constitutional Validity of Entry 5(e ) of Schedule II of the CGST Act:
- It was highlighted that the Show Cause Notice was premised on complete non-application of mind. It merely relied on the Show Cause Notices that were issued in the service tax regime to raise the demand under the CGST Act.
- Petitioner-Bank put forth that there was no independent application of mind as to how the alleged service qualified as a 'supply' under the CGST Act.
- It was submitted that interpreting the phrase 'agreeing to do an act' in a limitless way bringing under its ambit every form of activity would tantamount to overwriting commercial and contractual terms inasmuch as every independent obligation under the contract can be construed to be a 'supply'.
- On jurisdictional aspect, Petitioner-Bank called-into-question the assignment of officers vide Notification No. 02/2017- Central Tax dated June 17, 2017 and the corresponding Corrigendum
As an interim relief, the Delhi High Court has listed the writ petition for hearing in February 10, 2026.
Case Name: ICICI Bank Limited vs. Union of India & Ors.
For Petitioner: Senior Advocate Tarun Gulati with Advocates Sudipta Bhattacharjee, Onkar, Harsh Makhija and Arjyadeep Roy (from Khaitan & Co.)
For UOI: Advocate Awadesh Kumar Singh
For Respondents: SSC Anushree Narain with Advocate Naman Choula